Dun & Bradstreet India Survey finds Optimism level of CFOs for financial performance at a nine-quarter low

2024-04-17 04:54:30 Business

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Mumbai, November 25, 2022: A recent survey of Chief Financial Officers (CFOs) in India, conducted by Dun & Bradstreet India, a leading global provider of business decisioning data and analytics, found that the confidence of CFOs in financial and macro-economic conditions has declined over the same quarter in the previous year. The pan-India survey compared the confidence levels of CFOs for Q4 2022 with the previous quarter as well as the same quarter in 2021.

The Dun & Bradstreet India Composite CFO Optimism Index analyses the optimism level of CFOs on 12 parameters: operating margin, liquidity position, level of financial risk on company?s balance sheet, risk appetite, need for raising short-term and long-term funds, cost of raising funds, availability of funds, domestic and global macroeconomic scenario, overall scenario for mergers and acquisitions, and level of financial risks for corporate sector overall.

Key findings from the survey:
? The Composite CFO Optimism Index for Q4 2022 stands at 88.7,a decline of 16.2% on a y-o-y basis
? The optimism level for the macroeconomic scenario declined by 22.3% (y-o-y) in the services sector, while it increased by 2.5% (y-o-y) in the industrial sector
? The optimism level for financial performance declined by 23.9% (y-o-y) and 19.8% (y-o-y) in the services and industrial sector respectively
? Seven out of the eight parameters under the financial performance sub-index deteriorated in Q4 2022 on a y-o-y basis
? 48% of CFOs expect the cost of raising funds from the market to increase in Q4 2022

Commenting on the findings of the survey, Arun Singh, Global Chief Economist, Dun & Bradstreet said,?While festival related demand helped optimism in Q4 2022, heightened risks of global recession following the monetary tightening measures across countries continue to pose serious risks. Businesses are not feeling confident about their financial performance in Q4 2022, as compared to last year. Seven of the eight parameters under the financial performance sub-index deteriorated in Q4 2022 on a y-o-y basis, especially with regards to cost of borrowing funds. This current monetary tightening phase is expected to continue, and the past policy rake hikes are yet to be transmitted to the lending rates.?

About the Dun & Bradstreet India Composite CFO Optimism Index

The Dun & Bradstreet India Composite CFO Optimism Index, which has been tracking the changing sentiment of CFOs since 2012, is a leading indicator of the Indian financial market as it helps in predicting the performance of Sensex three months in advance.

A sample of companies belonging to basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and the services sector is selected randomly from Dun & Bradstreet?s commercial credit information file. The sample selected is representative of India?s business community. All the respondents in the survey are asked a set of questions regarding the financial performance of their companies and the overall macroeconomic scenario for the corporate sector in the forthcoming quarter. The CFOs are asked to state their expectations as to whether the specified parameters pertaining to their respective companies and the overall macroeconomic scenario will register an increase, decrease or show no change in the ensuing quarter as compared to the same quarter in the previous year. Two broad indices, optimism at the company level and optimism at the macroeconomic level, each consisting of eight and four sub-parameters respectively, are then designed.

About Dun & Bradstreet:

Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet?s Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity.