Is it possible for a new business to go public with an SME IPO?

Yes, a new company or startup can go public with an SME IPO. The BSE offers BSE Startups and the NSE offers NSE EMERGE-ITP platforms for startups. These platforms allow startups to go public with or without an IPO.

Note: Listing of startups in the Indian stock market has not been very successful. As of April 2023, of the 75 or so companies listed on the startup platform, only a couple were actively trading.

The criteria for a startup to go public are different from those for a small or medium enterprise. A startup with a turnover of Rs 10 crore can apply for an IPO on the BSE SME and NSE SME. If a company has not operated for three years and has received funding from private equity or angel investors, or funding from a public bank or financial institution, it can apply for an IPO.

The BSE SME and NSE SME platforms have the following criteria for a start-up or new company:

• Post Issue Paid Up Capital: not more than Rs 25 crores.
• Track Record: With a three-year track record, annual revenue should be Rs 10 crores, with an annual growth rate of 20% over the previous year.
• Positive net worth: The issuer should have positive net worth and have achieved operating profit (earnings before interest, depreciation, amortization and taxes) for at least the last two or three fiscal years. If the issuer has been in operation for less than three years, it should be financed by a public bank or financial institution.
• Other mandatory requirements: The issuer must not have been referred to the Industrial and Financial Reconstruction Board. There must be no stock market disciplinary action by the NCLT or court dissolution petition.
• Disclosure: Group companies must not have been subject to any stock market disciplinary actions in the past 1 year, must not be delinquent in interest and principal payments, must provide litigation status, and must provide any criminal proceedings against any of the directors.

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