Competitive and Contagion Effects of SME IPO in India: An Empirical Study

This study examines the competitive and contagion effects of SME IPOs in India, with a particular focus on firms from Gujarat. Using event study methodology and regression analysis, the research explores how IPO announcements and outcomes impact both issuing firms and peer companies. The results indicate strong contagion effects, as product–market overlap, oversubscription, and initial returns influence cumulative abnormal returns of related firms, reflecting investor sentiment and herding behavior. At the same time, the analysis highlights competitive effects, where successful IPOs enhance sales growth, liquidity, and visibility of issuing firms, demonstrating the strategic value of IPOs in strengthening financial performance and long-term positioning. Overall, the findings suggest that SME IPOs act as a catalyst for market development, while also posing risks of spillover effects that need to be carefully managed. The study offers important insights for SMEs, investors, and policymakers aiming to foster a balanced and sustainable SME capital market in India.