Sebi, exchanges revise ESM applicability for firms below ₹1,000 cr mcap

Business Standard

26-07-2025

The Securities and Exchange Board of India (Sebi) and exchanges have revised the enhanced surveillance mechanism (ESM) framework for companies with market capitalisation lower than ₹1,000 crore. The new framework will be applicable from July 28.
The decision to revise shortlisting criteria and norms for stage-wise movement under the framework was taken in a joint meeting on July 25. The changes are expected to benefit 28 companies.
Along with the existing shortlisting criteria based on high-low price variations, positive close-to-close price variation over the last three months have also been added as a requirement for moving a scrip to ESM stage 1.
This refe₹to a consistent increase in the prices of the shares of a company over the past three months, indicating increased interest from the investors.
Further, price to earnings ratio (PE) has also been added as one of the conditions for shifting a scrip from stage 1 to stage 2 of the ESM framework. A PE of up to 2-times the PE of the benchmark index Nifty 500 has been set as one of the requirements.
Last year in August, the market regulator had expanded the ESM framework to mainboard companies under ₹1,000 crore mcap.
The ESM framework is for monitoring and surveillance of listed companies based on price variation, standard deviation, etc. The framework is also applicable on small and micro companies.
If the company is in stage 1 of the framework, 100 per cent margin is applicable from T+2 day and the trade for trade settlement will be with the price band of 5 per cent. If the scrip already has a price band of 2 per cent, then that will continue.
The stage-wise review of stocks — for lower stage revision and exit — is done on a weekly basis.