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Determinants of Under Pricing in Initial Public Offerings of Small and Medium Enterprises

Department of Food Business Management and Entrepreneurship Development, National Institute of Food
Technology Entrepreneurship and Management, Sonipat-131 028 (Haryana), India
*(e-mail:; Mobile: 81999 50506)
(Received: May 20, 2022; Accepted: June 22, 2022)


The study aimed at evaluating the extent of under pricing at public issue platforms of small and medium
enterprises (SMEs) and to identify the factors impacting this short-run anomaly. The sample data
comprised 383 IPOs of the Indian SME platforms (NSE SME Emerge and BSE SME IPO). The study used
the model of market-adjusted excess return to identify under pricing levels and the multivariate regression model to identify the significant variables impacting IPO under pricing. The study found, on an average, under pricing of 8% at the Indian SME platform. Additionally, oversubscription, listing gains, issue size, pre-issue total assets, pre-issue debt-equity, firm size, pre-issue sales, pre-issue book value and promoters holding significantly impacted the under pricing levels in the Indian market. The results indicated under pricing being a universal phenomenon with the study’s implication for the investors, SMEs, intermediaries and regulatory bodies of the security market.
Key words : SME, under pricing, IPO, small business, capital market