CFOs’ confidence in financial conditions and macro-economic conditions have improved significantly during Q3 2023 compared to the same period previous year, said a survey conducted by Dun & Bradstreet India. 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.
According to the survey, the composite CFO Optimism Index stands at 95.1, an 11.1 per cent increase on a YoY basis. It said that the optimism level for the overall macroeconomic scenario increased by 26.7 per cent on-year basis in the industrial sector. Further, the survey said that 14 per cent of CFOs expect that the cost of raising funds from the market will reduce, reflecting an improved optimism over five quarters.
Dun & Bradstreet India stated that optimism for the domestic macro-economic scenario has improved significantly to 72 per cent in Q3 2023, which is the highest in 10 quarters, while the optimism for the global macro-economic scenario stands at 37 per cent in Q3 2023, which is the highest in 6 quarters.
The survey also stated that only 27 per cent of the CFOs are optimistic about the risk appetite of firms in the current scenario, which is the lowest in 10 quarters.
Commenting on the findings of the survey, Dr Arun Singh, Global Chief Economist, Dun & Bradstreet, said, “The increase in optimism for financial performance is being driven by the expectation of higher operating margins as the producer prices are steadily moderating along with improvement in supply chain. While high interest rates continue to cause discomfort amongst CFOs, the recently articulated dovish outlook by RBI offers some respite to CFOs regarding gradual decline in costs of raising investment and working capital as well as improved credit availability in the market. The decrease in global commodity prices and deflationary trends across markets globally contribute to heightened optimism towards domestic as well as global macroeconomic conditions, for the first time in five quarters.”
The Dun & Bradstreet India Composite CFO Optimism Index has been tracking the changing sentiment of CFOs since 2012. It is an indicator of the Indian financial market as it helps in predicting the performance of the Sensex three months in advance. The company randomly selects a sample of companies belonging to the basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and the services sector, from Dun & Bradstreet’s commercial credit information file, which is a 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 to make up the report, Dun & Bradstreet said.