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It’s getting harder for small listed companies to break into the big league. Fewer companies that debuted on India’s small and medium enterprise (SME) exchanges have graduated to the mainboard than during the post-pandemic peak. The slowdown is not entirely regulatory. A flood of recent initial public offerings—with many companies still too young to qualify for migration—has pulled down the overall conversion rate. Older cohorts dominate The picture changes sharply when companies are grouped by IPO vintage. Of the 551 SMEs listed through 2020, 339, or 61.5%, subsequently reached the mainboard. The 2018 batch produced the most graduates: 66% of 141 companies migrated. That was followed by the 2017 cohorts, in which 64.7% of 133 companies made the transition. Together, the two cohorts accounted for almost half of all migrations in the database. Recent cohorts have progressed more slowly. Only 16.9% of the 59 companies listed in 2021 migrated, while the figure was 12.8% of 109 issuers from the 2022 batch. No company listed from 2023 onward appears in the migration database. Gaurav Didwania, partner and fund manager at Qode Advisors, said the apparent fall in migration was partly a “measurement artefact” because companies from different vintages have had vastly different periods in which to qualify. “Companies listed through 2020 had up to a decade to qualify; the 2022 cohort has had only a few years. The higher financial thresholds also mean that some smaller companies from the IPO boom may never become eligible, irrespective of market conditions,” Didwania added. Part of the slowdown also reflects tighter eligibility rules. The National Stock Exchange of India increased the minimum listing period from two years to three and, from 1 May 2025, raised the market-capitalization threshold from ₹25 crore to ₹100 crore. Applicants must have revenue above ₹100 crore, a net worth of at least ₹75 crore and positive operating profit in two of the previous three years. They need at least 500 public shareholders, while promoters must retain at least 20% and no less than half their holding at listing. The BSE tightened its requirements in August 2025. It raised the minimum number of public shareholders to 1,000 from 250 and required an average operating profit of at least ₹15 crore over the previous three financial years, with a minimum of ₹10 crore in each year. “The slower pace reflects both the shorter track record of newer SME listings and a higher regulatory bar for migration. However, for companies ready to scale, better liquidity, institutional participation, capital access and credibility can outweigh the higher compliance burden,” said Pranav Haldea, managing director of Prime Database Group. Peak has passed The slowdown is also clearer when measured by year of migration. The number of companies moving to the mainboard rose from 38 in 2019 to 56 in 2020 and peaked at 65 in 2021, in the midst of the pandemic. Another 62 migrated in 2022. Together, 2020-22 accounted for 183 migrations, or just over half the total. The number fell to 38 in 2023 and 14 in 2024, before recovering to 22 in 2025. Eight migrations were recorded in the first eight months of 2026. The trend, therefore, represents a sharp step-down from the 2020-22 boom rather than a continuous decline. Migration itself is rarely immediate. The median company in the analysis took 3.2 years to reach the mainboard. About 46.3% migrated within three years and 69.1% within four years, while 17.4% took more than five years. “Migration to the mainboard is more than a prestige milestone. It widens the investor pool beyond the lot-based SME market, potentially improving liquidity, institutional participation and price discovery. It also gives companies greater flexibility to raise capital and strengthens their credibility with lenders, customers and analysts,” said Shashank Udupa, founder of Vayu Capital and a research analyst. “These benefits, however, must be weighed against higher compliance, disclosure and governance costs. For companies with sufficient scale and maturity, migration can be a meaningful strategic step.” Didwania said the business case was “structural, not sentimental.” Migration does not improve the underlying business, but it can remove market constraints that prevent a strong company from attracting a broader pool of investors and capital.
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