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 between ₹1 crore and ₹25 crore. SME IPOs differ from mainboard IPOs in several material respects: lot sizes are larger (the minimum application value is typically ₹1,00,000 or higher), the issue must be 100% underwritten by the merchant banker, and the basis of allotment is proportionate rather than draw-of-lots. 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 | Above ₹10 crore | ₹1 crore to ₹25 crore |
| Minimum application value | Typically ₹10,000–₹30,000 | Typically ₹1,00,000–₹2,00,000 |
| Allotment basis (oversubscribed) | Draw of lots (1 lot per RII) | Proportionate |
| Mandatory underwriting | Not required (unless eligibility conditions apply) | 100% underwriting by merchant banker |
| Market-making post-listing | Not required | Market maker mandatory for 3 years |
| Post-listing migration | N/A | Can migrate to mainboard above ₹25 crore paid-up capital |
The larger lot size in SME issues means the minimum bid for retail applicants is typically at or near the ₹2,00,000 UPI ASBA ceiling. As a result, many retail applicants can bid for only one lot in an SME issue, which also simplifies the quantity decision.
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. Given that one SME lot may be worth ₹1,00,000 to ₹2,00,000, most retail applicants will enter one lot. The application amount must not exceed ₹2,00,000 to use the UPI ASBA route; if the minimum application amount itself exceeds ₹2,00,000, you cannot apply through Zerodha’s UPI ASBA interface and would need to use 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, allotment is proportionate in oversubscription. If the issue is subscribed 5 times in the retail category, each eligible applicant receives roughly one fifth of their applied lots, subject to lot rounding. It is therefore rational for retail applicants in an SME issue to apply for the maximum permissible lots (up to ₹2,00,000) rather than the minimum, unlike mainboard issues where applying for more than one lot does not improve probability.
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
- Minimum application amount exceeds ₹2,00,000. Some SME issues with large lot sizes set a minimum bid above the UPI ASBA ceiling. In such cases, the UPI ASBA route is unavailable. You must 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.
- Issue not fully subscribed. SEBI ICDR mandates that an SME issue must receive minimum subscription of 90% of the total issue. If not achieved, the issue is withdrawn, bids are cancelled, and 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.