SMEs' operating cash flow fell 69% in FY24; sales outperformed

The first of a three-part series looks at the fundamentals of the small and medium enterprise segment amid heightened scrutiny of price action

- SACHIN P MAMPATTA

The cash flow from operating activities for small and medium enterprises (SMEs) listed on stock exchanges has more than halved (fallen 69 per cent) in the financial year 2023-24 (FY24) even as indices tracking the segment have been surging.

SMEs' operating cash flow for FY24 has been the lowest since the pandemic began, even as the BSE SME IPO index and the National Stock Exchange (NSE)'s Nifty SME EMERGE Index have roughly doubled in value during the period, and continued to hit new highs in the current financial year. These companies are listed separately from the main stock exchange platform and function with fewer compliance requirements, including the filing of financial results. The SME segment only requires them to file financial statements on a half-yearly basis.