Press Release

Optimism level of CFOs for operating margin and liquidity position is at a ten-quarter low – Dun & Bradstreet India Survey

Dun & Bradstreet India’s Composite CFO Optimism Index decreased by 7.8% on a y-o-y basis and increased by 8.3% on a quarter-on-quarter basis during Q1 2023.

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 CFOs’ confidence 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 Q1 2023 with the previous quarter.

Key findings from the survey:

  • The Composite CFO Optimism Index declined by 7.8% (y-o-y) to 96.1 in Q1 2023. However, the index increased by 8.3% on a q-o-q basis
  • The optimism level for overall macroeconomic scenario declined by 18.2% (y-o-y) in Q1 2023
  • Only 35% of CFOs expect an increase in the operating margin of their company in Q1 2023, lowest in 10 quarters
  • Only 7% of CFOs in the industrial sector expect the level of financial risks to decrease in Q1 2023, lowest since Q2 2012
  • Optimism for raising short term funds is highest since Q2 2012
  • Overall scenario for mergers and acquisitions is highest since Q2 2022
  • Risk appetite of the CFOs in the industrial sector is highest since Q1 2020

 

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.

Commenting on the findings of the survey, Arun Singh, Global Chief Economist, Dun & Bradstreet, said: ”The optimism level of CFOs has been subdued for five consecutive quarters, although the pace of decline moderated in Q1 2023. Even as the outlook for domestic growth remains positive, businesses remain wary about the economic developments in the domestic and global market. India’s growth forecast has been revised downwards in the last few months as core inflation has not yet abated, and interest rates are still inching up. As the global economy is headed towards a synchronized economic slowdown, export prospects remain weak. Reflecting upon the risk to the economic and business environment, CFOs remained cautious about operating margin and liquidity position – the optimism for which fell to a 10-quarter low in Q1 2023. Amidst the low optimism for profitability and liquidity position, the need for short term funds – an indicator for working capital – has surged to the highest level since Q2 2012, indicating a tightening of cash flow conditions. Businesses should remain vigilant and increase the close monitoring of strategic accounts and focus on effective recovery system”’.

 

 

 

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. For more information on Dun & Bradstreet, please visit www.dnb.com.

Dun & Bradstreet Information Services India Private Limited is headquartered in Mumbai and provides clients with data-driven products and technology-driven platforms to help them take faster and more accurate decisions across finance, risk, compliance, information technology and marketing. Working towards Government of India’s vision of creating an Atmanirbhar Bharat (Self-Reliant India) by supporting the Make in India initiative, Dun & Bradstreet India has a special focus on helping entrepreneurs enhance their visibility, increase their credibility, expand access to global markets, and identify potential customers & suppliers, while managing risk and opportunity.

India is also the home to Dun & Bradstreet Technology & Corporate Services LLP, which is the Global Capabilities Center (GCC) of Dun & Bradstreet supporting global technology delivery using cutting-edge technology. Located at Hyderabad, the GCC has a highly-skilled workforce of over 500 employees, and focuses on enhanced productivity, economies of scale, consistent delivery processes and lower operating expenses.

 

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