A Double-Edged Sword: SME Platforms For Gain & Loss

Yogesh Supekar and Arshad Hippagri come together to explore the world of SME stocks and investing. Then they come up with this report:

This September, Sensex hovering around the 30,000 level and Nifty inching towards 9000 may have brought great investment return for the ones who had entered the markets few years back, or may even few months back. But for some, these are too high levels to enter into the markets afresh. While most of them have been watching the spiralling indexes from outside the ring, wiser and some retail investors who believe in taking higher risks, have been checking out and investing in SME stocks through SME earmarked platforms of BSE and NSE. While the SME spaces are not much known among a large amount of retail investors who have so far shied away from getting into these spaces, a large number of risk-takers have made a good amount of money from their investments in the SME stocks. An almost virgin territory is ready to be grabbed, albeit with its pros and cons.

If one is ready to invest in the companies through SME platforms even after knowing that getting information on the promoters of most of these companies or even the companies itself is a tough task, lot sizes are huge and so every investment has to be worth ₹1 lakh and its multiples, this not-so-saturated market segment can be checked out.

Dinesh Rohira, Founder and CEO,5nance.com says, “Small and Medium Enterprises (SMEs), in many cases, are the promoter or individual driven and are led by first-generation entrepreneurs. The nature of business of these companies is very competitive and outward-looking. They generally fill - up the space between micro-enterprises and large corporations. There is no track record of the performance and so the investors have to judge the company's prospects and the promoters' ability based on their own assessment.”