India’s once busy SME-to-mainboard migration route has slowed sharply. Tougher rules, volatile markets and heightened governance scrutiny have cooled the graduation cycle that had gathered pace during the 2020–22 bull run.
A higher eligibility bar introduced in 2025 by the National Stock Exchange raised the threshold for graduation, reshaping the scale at which companies can aspire to move up.
The revised migration framework required small and medium enterprises (SMEs) to report revenue from operations exceeding ₹100 crore in the preceding financial year and maintain an average market capitalisation above ₹100 crore. Promoter shareholding at the time of application cannot fall below 50% of what was held at listing. The market-cap threshold alone represents a fourfold jump from the earlier ₹25 crore requirement.
The BSE followed in August 2025 with additional filters, mandating an operating profit of at least ₹15 crore over the past three financial years, with a minimum of ₹10 crore in each year. The minimum listing period before migration has also been extended from two years to three years, embedding a cooling-off phase.
Why migration matters
For SMEs, shifting to the mainboard is not merely a change in trading platform, it is a transformation in market positioning, investor access and corporate credibility.
On the SME platform, liquidity is often thin, and participation is largely driven by retail investors and a limited set of high-risk participants.
The mainboard, in contrast, opens the door to a far wider and deeper investor pool — including domestic mutual funds, insurance companies and foreign portfolio investors. Many institutional investors are restricted by mandate from investing in SME-listed stocks, but can deploy capital freely in mainboard companies. Migration, therefore, materially expands the potential shareholder base.
“After a phase of strong SME-to-mainboard migrations, the pace has moderated following tighter eligibility norms," said Pranav Haldea, managing director of Prime Database Group. "The mainboard carries both prestige and scale. The idea is to preserve the sanctity of the mainboard, ensuring only companies meeting higher financial and governance thresholds graduate,” he said.
Anand K. Rathi of Mira Money described the move as a structural shift in a company’s operational DNA. “The widened investor base creates more market depth and narrows the spread between buy and sell prices, providing a big positive on the liquidity side,” he said.
The regulatory rethink is also rooted in governance concerns. The Securities and Exchange Board of India (Sebi) flagged companies such as Gensol Engineering, SecUR Credentials and Varanium Cloud for alleged irregularities, including fictitious transactions, stock manipulation and misappropriation of funds — all of which had passed through the earlier migration framework.
SME to main board migrations were happening easily in an unhealthy manner. “The norms raising the bar for migration aims to prevent this misuse. Consequently, the number of migrations are likely to decline significantly," according to V.K. Vijayakumar, chief investment strategist at Geojit Investments.
Boom to bust
This tightening comes after a dramatic boom-and-bust cycle in SME migrations. A Mint analysis of 276 SME companies that have migrated to the mainboard since 2019 shows how sharply the trajectory has turned.
The graduation cycle peaked during the liquidity-driven bull market of 2020–22. In 2021, 65 companies transitioned to the mainboard, nearly double pre-pandemic levels. Another 62 migrated in 2022, according to Prime Database.
But the momentum quickly faded. Migrations fell to 38 in 2023, dropped to 14 in 2024, and slowed to just three in 2025.
Importantly, the deceleration began even before the stricter norms came into effect. Abhishek Mishra, founding partner at SKG Investment & Advisory, noted that the collapse in pipeline activity preceded the regulatory reset. “This tells you the tightening is compounding an already frozen market, not creating the slowdown from scratch,” he said.
A Mint analysis of long-term data across 336 SME companies highlights the deepening structural shift in the segment. Of the SMEs listed between 2012 and 2018, more than half of the companies typically graduated to the mainboard.
The post-pandemic years, however, marked a break. Of the 59 listings in 2021, only six companies migrated, pushing the conversion ratio down to 10%. In 2022, just two companies transitioned out of 109 listings — a mere 2% conversion rate.
Perhaps the clearest sign of the reset lies in migration timelines. Companies listed between 2012 and 2016 typically took 3–4 years to transition, but the cycle compressed sharply during the liquidity-driven rally, with the 2019 and 2021 cohorts migrating in about 2–2.5 years on an average.