The Awareness–Performance Paradox: Retail Investor Awareness, Participation and Perception of SME versus Mainboard IPOs in India

Abstract

Purpose – This study compares retail investors’ awareness, knowledge, participation, allotment experience and perceptions of Small and Medium Enterprise (SME) and Mainboard initial public offerings (IPOs) in India, and tests whether perceptions match the observed performance of the two segments.

Design/methodology/approach – A structured questionnaire was administered to 212 Indian retail investors in 2025. Paired Mainboard and SME items were compared with chi-square tests of homogeneity, Mann–Whitney U tests on ordinal scales and Cramér’s V. Comparative perceptions were tested with exact binomial tests. Perceptions were then benchmarked against market-adjusted listing and one-year returns of 291 NSE IPOs listed during 2015–2024.

Findings – Awareness of SME IPOs (59.4%) was far below awareness of IPOs generally (82.1%). Half of respondents (49.5%) had no knowledge of SME IPOs, against 28.8% for Mainboard IPOs. Non-participation was higher for SME IPOs (69.3% vs 48.1%), as was never having been allotted shares (77.8% vs 53.8%). All gaps were significant (p < 0.001; Cramér’s V = 0.22–0.25). Among respondents with a view, large majorities rated Mainboard IPOs superior on allotment success (75%), listing returns (63%), long-term gains (69%) and risk–return balance (80%). Yet observed SME listing returns were higher (33.8% vs 21.1% above the Nifty), revealing a perception–performance gap. About 48% of applicants relied on expert recommendations and only about 5% read the prospectus.

Originality/value –This is among the first studies to measure retail engagement with both IPO segments side by side and to confront investor beliefs with segment-level return evidence. It identifies an “awareness–performance paradox” in which the segment with higher listing returns is the least known and most distrusted.