Mainboard IPO vs SME IPO Types of IPOs, Key Differences and Risks Explained

You open your broker app and see two IPOs side by side. One asks for roughly ₹15,000. The other asks for more than ₹2 lakh. Both say “IPO,” both have a price band, and both promise a chance to get in early. So what’s the real difference?

That question is exactly what the Mainboard IPO vs SME IPO debate is about, and it matters more than most beginners realize. The two are regulated, priced, and traded differently, and they carry very different risks. In this guide, we’ll first answer how many types of IPOs there are, then compare Mainboard IPO vs SME IPO point by point, and finish with a practical checklist.

Quick answer: There is no single official count of IPO “types.” Investors usually sort IPOs in three ways: by platform (Mainboard or SME), by pricing method (fixed price or book building), and by structure (fresh issue, offer for sale, or both). The Mainboard IPO vs SME IPO split is the one that changes your risk the most.

Know more about How to Invest & Choose in IPOs

How Many Types of IPOs Are There?

People often ask for “the” number of IPO types, but the honest answer is that it depends on how you slice it. Here are the three classifications you’ll meet most often in India.

By pricing method, briefly. In a fixed-price issue, the company announces one price up front. In a book-building issue, it announces a price band (for example, ₹79 to ₹84), collects bids, and fixes the final price within that band based on demand. Book building is far more common among larger issues today, while smaller issues use both formats.

By structure, briefly. A fresh issue creates new shares and the money goes to the company. An Offer for Sale means existing shareholders sell their shares, so the money goes to them. Most IPOs combine the two. We covered this in more detail in our guide on what an IPO is.

Regional note: This classification is how IPOs work in India. In other countries, the labels differ. The UK, for example, has a junior market called AIM, and the US has direct listings and SPACs alongside traditional IPOs. The principle is the same everywhere: smaller, younger companies usually list on lighter-touch platforms, and those listings carry more risk.

What Is a Mainboard IPO?

A Mainboard IPO is an IPO by a larger, more established company that lists on the main boards of the NSE or BSE. These are the IPOs you see in the news most often.

Key features:

• Stricter entry tests. Under SEBI’s ICDR rules, one common route requires net tangible assets of at least ₹3 crore, average pre-tax operating profit of at least ₹15 crore, and net worth of at least ₹1 crore, tested on restated figures over the preceding three full years. A company that doesn’t meet these tests can still list through book building if it allots at least 75% of the net offer to qualified institutional buyers (QIBs).
• Direct SEBI review. SEBI reviews the draft offer document itself.
• Broad participation. A minimum of 1,000 allottees is required, so the shareholder base is wide.
• Quarterly reporting. Listed companies publish results every quarter, so you get fresher information.
• Accessible ticket size. Retail investors can apply for up to ₹2 lakh, and a single lot is often around ₹14,000 to ₹15,000.

What Is an SME IPO?

An SME IPO is an IPO by a small or medium-sized enterprise listed on a dedicated platform: NSE Emerge or BSE SME. The idea is to give younger and smaller businesses a cheaper, lighter route to raise money from the public.

Key features:

• Size cap. On the NSE Emerge platform, the post-issue paid-up capital (at face value) cannot exceed ₹25 crore.
• Lower profit bar. NSE requires operating profit (EBITDA) of ₹1 crore in any two of the three previous financial years, positive free cash flow to equity in at least two of those three years, and a positive net worth.
• Promoter skin in the game. Promoters must hold at least 20% of post-issue equity.
• Exchange vetting. The stock exchange vets the offer document, with SEBI acting in a supervisory role.
• Market maker. A market maker is mandatory for at least three years after listing to provide buy and sell quotes.
• Half-yearly reporting. Listed SME companies report half-yearly rather than quarterly.

The rules got tighter in 2025

SEBI notified changes to SME IPO norms on 4 March 2025. The key ones: the EBITDA requirement above, a cap on Offer for Sale of 20% of the issue (with no selling shareholder allowed to sell more than 50% of their holding), a cap on general corporate purposes spending at the lower of 15% of the issue or ₹10 crore, a ban on using IPO proceeds to repay loans from promoters or related parties, and a 21-day public comment period on draft documents. A phased lock-in also applies to promoter holdings above the minimum contribution.

Then, from 1 July 2025, new NSE and BSE bidding rules took effect. Individual investors in SME IPOs must bid for a minimum of two lots, with the application value above ₹2 lakh. Cut-off price bids are not available, and bids cannot be modified or cancelled once placed.

You can read the changes as a map of what regulators saw as weak spots: thin profitability, heavy promoter exits through OFS, and money used for vague purposes. That reading is our inference, but the rule changes themselves are on record.

Mainboard IPO vs SME IPO Side by Side Comparison

Figures reflect rules and exchange pages checked on 16 October 2026. Always confirm the latest numbers in the offer document and on the NSE/BSE websites before applying.

Risks of SME IPOs

The Mainboard IPO vs SME IPO question comes down to risk, so let’s be specific about the SME side.

1. Low liquidity. Fewer shares trade, and fewer people trade them. You may find it hard to sell at the price you want, or sell quickly at all.
2. Sharp price swings. Thin trading means a small amount of buying or selling can move the price a lot.
3. The market maker is temporary. Market-making support is required for three years. After that, nothing guarantees the same level of two-way quotes.
4. A high ticket size. With a minimum above ₹2 lakh, one SME application is a big bet for a first-time investor. Concentrating that much money in a small, illiquid company is risky.
5. Less frequent information. Half-yearly reporting means you see financial updates less often than for a mainboard company.
6. Business concentration. Many small companies depend on a few customers, a single product, or one region. Check the risk factors in the offer document for this.
7. Hype-driven demand. Grey market chatter and social media buzz can overshadow weak fundamentals. Chasing a listing pop is not an investment thesis.
8. Rigid bidding. No cut-off price and no bid modification mean you must decide carefully before you click apply.

Risks of Mainboard IPOs

Mainboard doesn’t mean safe. Common risks include:

• Aggressive pricing. Valuations may be set high relative to listed peers, leaving little room for gains after listing.
• OFS-heavy issues. If most of the issue is an Offer for Sale, little new capital goes into the business.
• Listing below the issue price. Plenty of IPOs list weaker than expected, especially when demand was driven by hype.
• Lock-in expiries. When promoter or anchor lock-ins end, a rush of selling can pressure the price.
• Business and sector risk. A big company can still face debt, regulatory, or competitive problems.

Mainboard IPO vs SME IPO Which One Suits Which Investor? (A Framework, Not Advice)

This table describes trade-offs, not a recommendation. Your own goals, income, and risk tolerance decide what fits you.

A Simple Checklist Before Applying to Either

1. Read the risk factors in the RHP first, before any marketing.
2. Check three years of revenue, profit, and debt. Look for consistency, not one strong year just before the IPO.
3. See how the money is used. Prefer fresh issues funding real growth over large promoter exits.
4. Compare valuation with similar listed companies.
5. Confirm the platform. Know whether it’s Mainboard or SME before you check the lot size.
6. Check your cash. For an SME IPO, can you comfortably block more than ₹2 lakh, and could you live with that money being stuck?
7. Ignore GMP as a signal. It’s an unofficial number, not market data.
8. Plan your exit. Ask how you’d sell if liquidity dried up.

Common Mistakes to Avoid

• Treating Mainboard IPO vs SME IPO as only a difference in ticket size, when the liquidity and disclosure gaps matter just as much.
• Applying to an SME IPO because of listing-day stories without reading the offer document.
• Putting a large share of your savings into one small-company IPO.
• Missing the 5:00 PM UPI mandate deadline on the last day.
• Assuming oversubscription proves the business is sound. It only shows demand.

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