Despite liquidity pressures in global markets, India remains beacon of stability, says Dr Singh
Chief Financial Officers (CFOs) in India have expressed confidence in financial conditions and macro-economic conditions, saying these have improved significantly compared to same period previous year.
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 on 6 May, “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.”
The CFOs surveyed by Dun & Bradstreet India responded:
• 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. Fiinews.com
