Not All SMEs Fell: The Quiet Multibagger Run of 2025

Picture Credit: by The Economic Times

India’s SME IPO market faced a sharp reality check in 2025 after an exuberant run in the previous year. A combination of stretched valuations, weaker post-listing performance, and tighter investor scrutiny led to a noticeable cooling in sentiment. Several newly listed SME stocks struggled to sustain their issue prices, reinforcing concerns about speculative excesses in the segment. However, beneath this broader slowdown, a quieter and more compelling story unfolded.

Even during this challenging phase, a select group of SME stocks delivered impressive multibagger returns, underlining the importance of stock selection rooted in fundamentals rather than momentum. Data from Trendlyne shows that around 29 SME stocks managed to outperform the broader market significantly, generating substantial wealth for investors who stayed focused on business quality, earnings visibility, and balance-sheet strength.

These standout performers were largely companies with consistent revenue growth, healthy margins, and scalable business models. Many operated in niche segments such as specialty manufacturing, engineering services, chemicals, and technology-enabled services, where demand remained resilient despite broader market volatility. Strong order books, prudent capital allocation, and disciplined cost management helped these firms navigate a tougher funding and operating environment.

Picture Credit: by Business Today

The contrasting outcomes within the SME space highlight a maturing market. Investors are becoming more discerning, moving away from blanket enthusiasm toward selective participation. Companies with weak fundamentals or aggressive pricing found it harder to attract sustained interest, while fundamentally sound businesses continued to gain investor confidence over time.

The 2025 experience serves as a reminder that SME investing is not about chasing every new listing but about identifying durable businesses early in their growth cycle. Even in a subdued market, quality companies can compound wealth, proving that long-term returns are driven by fundamentals, patience, and careful analysis rather than market hype alone.