Financial optimism is rising as liquidity concerns ease

MUMBAI,  India , May 6, 2024 -- 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 conditions and macro-economic conditions has improved significantly compared to same period previous year.

Key findings from the survey:

• The Composite CFO Optimism Index stands at 114.2, 9.4% higher on q-o-q basis.
• Overall optimism for financial performance stands at 108.6 for Q2 2024, highest in 13 quarters.
• CFO optimism Index for service sector stands at 116.1 for Q2 2024, improving by 13% (q-o-q).
• Optimism for overall macroeconomic scenario improved by 4.7% for Q2 2024, driven by 10.6% increase in service sector. Although, optimism moderated for industrial sector by 3.9%.
• Optimism regarding the domestic macroeconomic situation for the businesses stands at its highest since Q4 2014.
• Optimism regarding the operating margins and liquidity position of businesses stands 13-quarter high.
• 24% of CFOs are optimistic about the reduction in cost of raising funds in the market for Q2 2024, highest since Q1 2022.
• Optimism among the CFOs regarding the need to raise short term funds stands all-time high, with 54% of CFOs expecting an increase for Q2 2024.
• Optimism for the reduction in level of financial risks on the balance sheets of businesses stands highest in 8 quarters.
• Optimism for the global macroeconomic situation remains stagnated for Q2 2024.
• Optimism for the scenario of mergers and acquisitions has reduced to seven-quarter low for Q2 2024.
• Optimism for the availability of funds to businesses in industrial sector has reduced by 8 percentage points for Q2 2024 on quarterly basis.

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 businesses.

Commenting on the findings of the survey, Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet, said, "India's financing landscape and the financial performance of businesses continue to exhibit strength, with the financing optimism index rising by 9.4% in Q2 2024, contrasting the global trend of stagnation observed in D&B's Global Business Financial Confidence Index. Despite liquidity pressures prevailing in global markets, India remains a beacon of stability, boasting its highest liquidity levels in 13 quarters. Our survey underscores businesses' confidence in managing balance sheet risks, driven by lower funding costs despite high interest rates. Increased demand visibility in the near term, coupled with lower input costs, enhances cash flow generation, fostering confidence among firms to utilize higher short-term funds for working capital needs. Among sectors, the services sector exhibits greater confidence than industrials, buoyed by stronger-than-expected export performances. Conversely, the industrial sector is cautious about the potential reversal of lower input costs and forthcoming supply chain challenges in the near-to-medium term."

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 the 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.

Visit www.dnb.co.in for more information.

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Dun & Bradstreet Contact: Kaustav Bhattacharya

Email: BhattacharyaK@DNB.com

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