The employee quota in initial public offerings (IPOs) of small and medium enterprises (SMEs) is emerging as the weakest link, with a majority of recent issues struggling to strike a chord with their own workforce.

An analysis of the last 10 SME IPOs shows that seven failed to achieve full subscription in the employee category, even as other major segments—qualified institutional buyers (QIBs), non-institutional investors (NIIs), and retail investors—garnered strong demand.

According to data compiled by IPO Central, only three of the last 10 SME IPOs—Grand Continent Hotels, PS Raj Steels, and BR Goyal Infrastructure—managed to secure full or near-full subscription in the employee quota. IPO Central is a platform that provides the latest information about IPOs.

What is notable is that even in high-demand IPOs such as Glen Industries and Meta Infotech, which received overall record subscriptions of 260 times and 167 times, respectively, the employee category failed to attract full participation. A similar trend was observed in other SME IPOs like Tankup Engineers (overall subscription: 121.56x) and BR Goyal Infrastructure (118.16x).

In many cases, the employee category barely crossed half the quota, with subscription multiples as low as 0.21 times in Chandan Healthcare and 0.31 times in Star Imaging & Path Lab. While Glen Industries and Meta Infotech’s employee segments received 0.36x and 0.59x bids, respectively, Tankup Engineers and BR Goyal Infrastructure garnered 0.36x and 1.11x.

According to market analysts, the higher ticket size requirement in SME IPOs is one of the key reasons behind the low subscription in the employee quota. The Securities and Exchange Board of India (Sebi) recently doubled the minimum application amount to two lots, taking the entry bar to ₹2,00,000.

“The most obvious culprit behind the trend of employee quota remaining undersubscribed is the higher ticket size requirement in SME IPOs. While SME IPOs were already out of reach of many employees, Sebi recently doubled the application amount to two lots, taking the minimum application size to ₹2,00,000. This has naturally reduced the number of applications,” said Anil Sharma, Co-founder, IPO Central.

“However, there are other factors at play too. Smaller headcount, limited communication infrastructure, and a workforce skewed towards blue-collar roles are some of the reasons holding back wider participation of employees,” he said.

Meanwhile, India’s SME IPO market remains on a record-breaking trajectory in 2025, riding a wave of investor interest and buoyed by the strong momentum of the past two years. According to Prime Database, 126 SME IPOs have raised over ₹5,548 crore through listings on the BSE SME and NSE Emerge platforms so far this year, marking a significant surge in both volume and value.

This surge follows a blockbuster 2024, which saw 240 SME IPOs debut across both exchanges, mobilising over ₹8,760 crore, the highest ever in a calendar year since the segment’s inception in 2012.

However, SME IPOs have seen a marked decline in listing gains in 2025, with the average gains dropping to nearly 10%, a steep fall from the ~60% gains recorded last year.