SME Market Brief: The Mainboard Migration Slowdown India’s SME stock platforms, once a high-speed launchpad for small enterprises to reach the mainboard, are navigating a period of intense regulatory recalibration. Stricter listing norms and enhanced tenure requirements have effectively filtered the pipeline, leading to a sharp decline in successful transitions. As of February 2026, the migration data reveals a stark trend. The number of companies moving from SME platforms to the mainboard has plummeted from a peak of **65** in 2021 to just **3** in 2025. This downturn is largely attributed to new eligibility frameworks that prioritize quality and financial stability over quantity. Enhanced Barriers to Entry Exchanges have implemented a significant "quality check" on emerging firms. Under the revised norms effective since May 2025, a company must now demonstrate a minimum revenue of **₹100 crore** in the previous financial year to even apply for migration. Further raising the bar, the average market capitalization requirement has been hiked from **₹25 crore** to **₹100 crore**. Companies must also show a positive operating profit in at least two out of the three preceding financial years, replacing more lenient EBITDA mandates. Stricter Tenure and Governance The transition timeline has widened considerably. The mandatory listing period on the SME platform is now a minimum of **3 years**, compared to previous years when firms could migrate in under two. Additionally, promoters must maintain at least **20%** shareholding at the time of application, and their holdings cannot fall below **50%** of their initial stake upon listing. This ensures that the leadership remains committed to long-term growth during the transition. Current Market Reality The secondary market for SMEs is currently facing a reality check. In 2026 so far, average returns for SME IPOs have dipped to **-2.4%**, with approximately **60%** of recently listed companies trading below their issue price. While the primary market remains resilient—with **217** SME listings in the latest fiscal cycle mobilizing **₹9,635 crore**—the speculative "mad rush" has cooled. Out of the roughly **25** SME IPOs launched in early 2026, only about **40%** remain above their issue price as of late February. The ecosystem is shifting toward a "reset" phase. While around **350** companies have successfully migrated to the mainboard since the platforms' inception, the current environment demands much higher financial maturity and governance from any small enterprise looking to graduate.