September 19, 2024
Favorable Macroeconomics Propel Industrial Sector’s Financial Optimism To Record High #IndustryFinance

Favorable Macroeconomics Propel Industrial Sector’s Financial Optimism To Record High #IndustryFinance

CashNews.co

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 the same period in the previous year.

Key findings from the survey:

– The Composite CFO Optimism Index improved by 8.0% (q-o-q) in Q3 2024.

– Overall optimism for financial performance has improved by 2.4% in Q3 2024.

– Optimism for the overall macroeconomic scenario stands at 142.6 in Q3 2024, increasing by 14.5% on a quarterly basis.

– Optimism for financial performance within the Industrial sector stands at an all-time high of 134.2.

– Optimism for operating margins of companies remains undeterred, standing highest in 14 quarters.

– Optimism regarding the reduction in the level of financial risks on companies’ balance sheets stands highest in 12 quarters.

– Optimism regarding the availability of funds stands highest since Q1 2017.

– Optimism for the need to raise short-term funds among CFOs stands at an all-time high.

– Optimism for the global macroeconomic scenario stands highest in 13 quarters, with a significant increase in the industrial sector.

– Optimism for the liquidity position of companies has moderated by 4 percentage points on a quarterly basis.

The Dun & Bradstreet India Composite CFO Optimism Index analyzes the optimism level of CFOs on 12 parameters: operating margin, liquidity position, level of financial risk on the 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.

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Commenting on the findings of the survey, Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet, said:

“Financial optimism among Indian firms remains strong, with the services sector maintaining its positive outlook due to a steady global demand recovery. The industrial sector has shown a notable turnaround in Q3 2024, benefiting from expected improvements in both domestic and global economic conditions. Anticipated rate cuts have led businesses to delay long-term funding needs, reflecting a moderated optimism in this area. Overall, financial optimism is broad-based, driven by higher profitability expectations, lower financial risk, and ample fund availability. Financial risks are at their lowest in 12 quarters, and the demand for short-term funds is at an all-time high as firms feel secure and well-positioned.”

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.

(Except for the headline, this story has not been edited by Newsx staff and is published from a syndicated feed.)

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