Indian CFOs’ confidence in financial conditions and macro-economic conditions has improved significantly compared to the same period last year, said a survey by Dun & Bradstreet India. The Dun & Bradstreet India Composite CFO Optimism Index stood at 103.7, 9.1 percentage points higher on a QoQ basis. While the overall optimism for financial performance stands at 99.0 in Q4 2023 which is the highest in 8 quarters, optimism for the overall macroeconomic scenario decreased for the industrial sector by 6 percentage points (QoQ). Also, optimism for the global macro-economic scenario has diminished, with 33 per cent of respondents expecting it to decrease in Q4 2023, compared to 37 per cent in Q3 2023.
The survey also stated that 52 per cent of CFOs are optimistic about the requirement for short term funds in Q4 2023, which is the highest since the inception of the index in 2012. Also, 52 per cent of CFOs are optimistic about the availability of funds in the market in Q4 2023 which is the highest in 11 quarters. Further, 42 per cent of CFOs in the industrial sector expect the operating margin of the company to decrease in Q4 2023, 9 percentage points lower than Q3 2023.
Dr Arun Singh, Global Chief Economist, Dun & Bradstreet, said, “Despite escalating geopolitical tensions stemming from the Israel-Hamas conflict and the existing global financial strain from high interest rates and increased risk, domestic CFOs’ confidence remains steadfast. CFOs exhibit heightened optimism compared to the previous quarter, forecasting enhanced business activity and a positive financial outlook for companies.”
“Businesses are swiftly adapting to the high interest rates, fostering hope for an early end to monetary tightening and a surge in consumer demand. This shift drives the need for increased working capital and credit for capital expenditures. Nonetheless, there’s an anticipation of amplified financial risks linked to balance sheet volatility due to turbulence in global capital markets. Specifically, the industrial sector faces challenges with expected rising costs impacting operating margins, likely to remain subdued,” he added.
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.