How to apply for an SME IPO on Zerodha
An SME IPO is an initial public offering conducted on the SME platforms operated by the National Stock Exchange (NSE Emerge) or the Bombay Stock Exchange (BSE SME), for companies with post-issue paid-up capital of up to Rs 25 crore (SEBI ICDR Regulation 229). SME IPOs differ from mainboard IPOs in three ways that affect the application: the minimum application is two lots and above Rs 2 lakh (Regulation 267(2), from 8 March 2025), the issue must be 100% underwritten (Regulation 260), and the individual investor category accepts only bids of exactly the minimum application size, allotted by draw of lots when oversubscribed. This guide covers the end-to-end application procedure through Zerodha.
For the generic Kite web procedure see the Kite web IPO guide . For the differences between the two issue types see the mainboard vs SME comparison wiki. For the underlying mechanism see UPI ASBA .
How SME IPOs differ from mainboard IPOs
Understanding the structural differences helps you apply correctly and manage expectations.
| Feature | Mainboard IPO | SME IPO |
|---|---|---|
| Exchange platform | NSE main / BSE main | NSE Emerge / BSE SME |
| Post-issue paid-up capital | No ceiling | Up to Rs 25 crore (ICDR Reg 229) |
| Minimum application value | Rs 10,000 to Rs 15,000 (Reg 47(2)) | Two lots, above Rs 2 lakh (Reg 267(2)) |
| Allotment basis (oversubscribed) | Draw of lots (minimum lot per RII) | Draw of lots (two-lot minimum per individual investor) |
| Mandatory underwriting | Not compulsory in full | 100%, lead manager at least 15% on own account (Reg 260) |
| Market-making post-listing | Not required | Market maker mandatory for 3 years (Reg 261) |
| Post-listing migration | N/A | May migrate to mainboard with paid-up capital above Rs 10 crore and up to Rs 25 crore (Reg 277) |
Because the individual investor category in an SME issue accepts only the minimum application size, the quantity decision is fixed: two lots. A bid of more than two lots is classified as non-institutional.
Step-by-step procedure
Confirm the issue is an SME issue
On Zerodha Kite under Bids → IPO, each issue card displays the platform label. SME issues are tagged NSE Emerge or BSE SME. The issue card also shows the minimum application value, which is the first indicator of an SME issue. You can cross-check on the SEBI public issues portal where SME and mainboard issues are categorised separately.
Sign in to Zerodha Kite
Go to kite.zerodha.com . Enter your client ID and password, then complete TOTP two-factor authentication. Ensure that the bank account linked to your UPI ID is the same account whose PAN is registered on your Zerodha demat.
Navigate to Bids, then IPO, and locate the SME issue
Click Bids in the top navigation, then IPO in the sub-navigation. Scroll through the open issues list to find the SME issue. The issue name, platform (NSE Emerge or BSE SME), price band, lot size, and minimum application amount are displayed on the card.
Review the Red Herring Prospectus
Click the issue card and open the RHP link. The SEBI ICDR regulations for SME issues (Chapter IX of SEBI ICDR 2018) permit a shorter form of prospectus, but the material disclosures (objects of the issue, financials, risk factors, promoter holding, and underwriting details) are still required. Pay particular attention to:
- Underwriting commitments, the names of the underwriters and the portions they cover.
- Market-making arrangement, the merchant banker is required to appoint a market maker for at least three years post-listing to provide liquidity.
- Financial disclosures, SME issuers may have shorter operating histories and more concentrated revenue bases than mainboard issuers.
- Lock-in provisions, promoters’ pre-issue shares are locked in under the same SEBI ICDR provisions as mainboard issues.
Click Apply, select investor type, enter quantity and UPI ID
Click the Apply button. The investor type defaults to Individual (retail). For most SME issues, only the retail and NII categories are relevant; shareholder and employee reservations are less common in SME issues.
Enter the number of lots. An individual investor enters two lots, the minimum application size under ICDR Regulation 267(2); entering more makes the bid non-institutional. UPI ASBA bids are allowed up to Rs 5 lakh, so a two-lot bid normally fits; a bid above Rs 5 lakh needs bank ASBA.
Select Cut-off or a specific price within the price band. Enter your UPI ID.
Tick the SEBI undertaking and submit
Tick the SEBI undertaking checkbox and click Submit. Zerodha routes the bid to the exchange and triggers the UPI mandate. The bid status changes to Pending Mandate within thirty seconds.
Approve the UPI mandate
Open your UPI app and approve the Block Funds for IPO mandate before 5 PM IST on the bid closing day. The block amount must equal the full application value. For the per-app procedure, see the generic mandate approval guide or the individual app guides:
Check bid status and allotment on T+1
Navigate to Bids → Order history on Kite. Statuses are:
- Mandate Accepted, lien in place; bid confirmed.
- Allotted (N lots), the registrar has allotted N lots to you.
- Not Allotted, no allotment; lien released.
For SME issues, every individual investor applies for the same two-lot size, so an oversubscribed individual category is allotted by draw of lots under Schedule XIV of the ICDR Regulations, and each winner receives two lots. Non-institutional applicants receive their minimum application size first, by lottery if shares fall short, and any balance proportionately (Regulation 268(3A), from 8 March 2025).
Allotment status becomes available on T+1, shares are credited to your demat on T+2, and listing and trading begin on T+3.
What can go wrong
- Bid above Rs 5 lakh. A bid larger than the Rs 5 lakh UPI ASBA limit cannot be blocked through UPI. Apply through your bank via bank ASBA.
- UPI mandate notification not received. Pull-to-refresh the pending-requests section of your UPI app. SME sponsor banks are sometimes smaller regional banks and may have slower notification dispatch; allow up to fifteen minutes.
- Thin post-listing liquidity. Even after a successful allotment, SME shares may trade at wide bid-ask spreads. The mandatory market maker is not required to quote unlimited depth; large sell orders may move the price materially.
- Too few allottees. An SME issue must be fully underwritten (ICDR Regulation 260), so shortfalls are taken up by underwriters, but no allotment can be made if there are fewer than 200 allottees (Regulation 268(1)). In that case all mandate blocks are released.
Related guides
- How to apply for a Mainboard IPO on Zerodha
- How to apply for an IPO on Kite web
- How to apply at the cut-off price
- How to approve a UPI IPO mandate
- How to check IPO allotment status on Zerodha
- How to release blocked IPO funds after non-allotment
References
- SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, Chapter IX (SME Issues), https://www.sebi.gov.in/legal/regulations/aug-2018/sebi-issue-of-capital-and-disclosure-requirements-regulations-2018_39971.html .
- SEBI Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, T+3 listing timeline.
- NPCI Circular dated 8 September 2025, Enhancement of UPI Per-Transaction Limits for Capital Markets.
- NSE Emerge platform guidelines, https://www.nseindia.com/sme/content/general/SMEFramework.htm .
- How to apply for IPOs, Zerodha Support Portal, https://support.zerodha.com/category/trading-and-markets/ipo/ipo-application/articles/how-to-apply-for-ipos-and-how-to-stay-informed-of-new-ones .