NSE puts 90% cap on listing price for SME IPOs; check details

The National Stock Exchange (NSE), in a circular issued on Thursday, July 4, said it was imposing a cap on the opening price of shares listed under the small and midsize enterprises (SME) category.

The opening price of shares listed under the SME segment can be higher only "up to 90% over the issue price", said the NSE circular, which will be applicable with immediate effect.

"To standardise the opening price discovery/ equilibrium price across exchanges during special pre-open session for initial public offer (IPO) for the SME platform, it has been decided to put an overall capping up to 90% over the Issue price for SME IPOs," the circular stated.

NSE clarified that the price control cap of 90% will be applicable only to the SME segment, and "not for mainboard IPOs". "The circular will come in force with immediate effect i.e. 4th July 2024," it further noted.

What the NSE directive means

In a move that is likely aimed at check froth concerns, the NSE has clearly imposed an upper ceiling on the opening price of shares on its NSE Emerge platform, which is used for SME listings.

For instance, the shares of a company which launched an SME IPO in the range of ₹90-100 per share, will open at not more than ₹190 per scrip on the listing date.

The circular comes in the backdrop of three SME IPOs listing at a bumper premium this week. This includes Diensten Tech, which listed at 140% premium at ₹240 per share on July 3.

Nephro Care listing to be impacted?

The NSE circular may impact the listing price of Nephro Care, whose IPO received an unprecedented response. The company's shares are scheduled to list on the NSE Emerge platform on Friday, July 5.

The public issue, which was open for subscription on three working days ending July 2, was booked 716 times.

Following the strong subscription, the grey market was reportedly bullish on Nephro Care's Dalal Street debut. The grey market premium (GMP) on the shares crossed ₹180, as per the details shared by investorgain.com on July 3. This indicated that the shares could be listed at around ₹270, which would have marked a 300% premium against the upper end of the IPO price band of ₹90.

However, with the NSE circular on SME IPOs coming into effect, the listing price will be capped at a maximum of ₹171 per share, which is 90% higher as compared to the upper IPO price of ₹90.