Social media is abuzz with criticism over the recent oversubscription of SME IPOs, particularly Boss Packaging Solutions. Despite underwhelming financials and a less-than-stellar office appearance, Boss Packaging's IPO was oversubscribed 135 times. This trend, also seen in Resourceful Automobile's IPO, has raised concerns about market manipulation and unrealistic valuations. Markets regulator Securities and Exchange Board of India (SEBI) has issued a warning about companies resorting to "unrealistic pictures of their operations".
With a modest issue size of ₹8.41 crore, Boss Packing Solutions, a company involved in packaging machine manufacturing, saw bids totalling an incredible ₹1,073 crore. However, the financials paint a less impressive picture. According to its Red Herring Prospectus (RHP), the company's profits remained stagnant over the last two years.
This echoes the scenario with Resourceful Automobile, another SME IPO that had raised eyebrows when it received bids worth nearly ₹5,000 crore, despite operating with just eight employees. The much-hyped issue saw a 418.82x subscription, driven by retail investors, but ultimately listed flat at its issue price of ₹117 per share, disappointing many who had anticipated a significant premium.
SEBI has been vocal in warning investors about the dangers of overly optimistic portrayals of small company operations. "It has come to the notice of SEBI that, post-listing, some SME companies and/or their promoters have been resorting to certain means that project an unrealistic picture of their operations," the markets regulator said in an advisory issued just before Resourceful Automobile's listing. The regulator cautioned investors not to fall for social media-driven hype or unverified information.
While Boss Packaging Solutions’ IPO numbers looked impressive on paper, the company found itself at the centre of social media ridicule for the condition of its office. Photos of its dilapidated building, taken from Google Street View, circulated widely on X (formerly Twitter), fuelling criticism from users.
Many questioned the wisdom of subscribing to an IPO for a company operating from such a modest space, with peeling paint and piles of garbage outside. "64 employees, one old office, and 135x subscription for Boss Packaging SME IPO! This mad rush has to stop!" one user posted on X, expressing disbelief at the frenzy.
“Boss packaging solutions oversubscribed by 54X.😯Inka office dekh kar toh shock lag gaya! Kam se kam Resourceful Yamaha company ke paas showroom toh tha,” a X user posted.
“Office of boss packaging Pvt Ltd, at Ramol, Ahmedabad. IPO of the company subscribed by 165 times in retail category. Yes we are in a bull market frenzy,” another reacted.
