A Once-in-a-Lifetime Opportunity For India's MSME IPO, Says Co-Founder Of Tajurba Business

India's SME IPO market expanded at an unprecedented rate in 2024.  236 small and medium-sized businesses raised a total of over ₹8,600 crore, the largest capital injection in this category's history, according to statistics from Prime Database.

In addition to demonstrating the strong entrepreneurial spirit in the nation, this spike in SME IPOs also highlights the growing investor trust in smaller businesses. But what’s driving this IPO wave? Why are MSMEs now seeing listing as a strategic move, and what challenges do they face in this journey?

Suresh Mansharamani, entrepreneur, motivational speaker, Business coach and co-founder of Tajurba Business Network, breaks down the key factors behind this boom, the industries poised for success, and why MSME founders should act now before regulatory doors tighten.

What Makes an MSME Ready for an IPO?

According to Mr. Mansharamani, the three key factors that determine IPO readiness are:

• Scalable Business Model – The company must have growth potential.
• Strong Financials – A healthy balance sheet is essential.
• Regulatory Compliance – No legal issues or promoter defaults should exist.

“If these boxes are ticked, the potential is huge!” he emphasised.
“Certain industries, such as pharma, healthcare, renewable energy, drones, and IT, have higher IPO success rates due to strong market demand and innovation”, he added further.

The MSME IPO Boom in India

India has seen a sharp rise in SME IPOs, nearly doubling in 2024. Mr. Mansharamani attributes this boom to:

Investor Excitement – Many SME IPOs have listed at double their issue price, with some skyrocketing 1,000% or even 2,000%.
Growing Awareness – More MSMEs now understand IPO benefits and are cleaning up their financials to become compliant.

“This shift—where SMEs are actively working on financial discipline—has been a game-changer,” he said.

SEBI ’s Role in Strengthening SME IPOs

SEBI has streamlined IPO processes, but with rapid growth, quality concerns have emerged. Some companies with minimal operations got listed, leading to suspensions of around 40 companies.
To tackle this, SEBI has introduced stricter regulations, including:

• Limited use of IPO funds – Companies can’t use proceeds to repay debts.
• Stronger financial disclosures – Ensuring transparency.

“The goal is clear: fewer IPOs, but of much higher quality,” he explained.

Biggest Hurdles MSMEs Face & How To Overcome Them

According To Mansharamani, the biggest challenge for MSMEs isn’t finance—it’s fear. Many MSMEs have traditionally operated informally, and suddenly, the thought of stricter financial reporting and tax payments scares them. He advised that one can get over this fear by paying taxes and maintaining proper financials, which attract higher valuations, better investor confidence and long-term stability.

“It’s a short-term pain for long-term gain, and I always tell them, Get over this fear—what you gain is far greater than what you fear” , he said.

Advice for MSME Founders: Don’t Miss This Opportunity

For MSMEs hesitant about going public, Mr. Mansharamani offers a clear message, saying that this is a once in a life time chance and should not be missed.

He talked about several benefits of an IPO, including:

• Funding without interest – Unlike loans, IPO capital doesn’t need repayment.
• Higher company valuation – Market forces determine a fair value.
• Better talent, vendors, and customer trust – A listed company enjoys credibility.

“Most founders fear compliance, but that’s handled by professionals. The founder just needs to focus on running the business. Regulations evolve, and if a major scam happens, the doors to SME IPOs could tighten. The next two years are crucial—take the leap now,” he added.

The Future of MSME IPOs in India

Looking ahead, Mansharamani envisions a clear future of the IPOs boom with 500 MSMEs getting listed and scaling successfully. A shift from quantity to quality IPOs in the next 2 years.
Rather than accelerating IPOs, he believes stricter regulations will ensure stronger, better-prepared companies go public with a higher success rate.

According to Mansharamani, collaboration is key in making IPOs a more viable option for MSMEs. CA institutes must educate accountants – Many still advise against IPOs to help MSMEs avoid taxes rather than focusing on growth. Industry bodies should promote IPO readiness programs. 

Government incentives for IPO-preparing MSMEs could encourage participation.
“If all stakeholders—regulators, advisors, and MSMEs—work together, we can make IPOs a game-changer for small businesses in India.”