Indian CFOs Optimistic About Financial Performance Despite Geopolitical Heat - D&B

Chief financial officers (CFOs) in India remain optimistic about the financial performance in the fourth quarter of 2023 despite escalating geopolitical tensions, according to a survey by Dun & Bradstreet India.

The survey found that CFOs’ confidence in financial conditions and macro-economic conditions has improved significantly compared to same period last year, the global provider of business decisioning data and analytics said in a statement.

The Dun & Bradstreet India’s Composite CFO Optimism Index increased by 9.1% on a quarter-on-quarter (QoQ) basis during the fourth quarter of 2023, it added.

“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,” Dun & Bradstreet Global Chief Economist Arun Singh said.

CFOs exhibited heightened optimism compared to the previous quarter, forecasting enhanced business activity and a positive financial outlook for companies, he added.

Singh said 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, it added.

“Nonetheless, there's an anticipation of amplified financial risks linked to balance sheet volatility due to turbulence in global capital markets,” Singh said. “Specifically, the industrial sector faces challenges with expected rising costs impacting operating margins, likely to remain subdued."

Key findings from the survey are:

• The Composite CFO Optimism Index stands at 103.7, 9.1 percentage points higher on a QoQ basis.

• Overall optimism for financial performance stands at 99 in the fourth quarter of 2023, highest in eight quarters.

• Optimism for overall macroeconomic scenario decreased for the industrial sector by 6 percentage points QoQ.

• Optimism for the global macro-economic scenario has diminished, with 33% of respondents expecting it to decrease in the fourth quarter of 2023, compared to 37% in the third quarter.

• 52% of CFOs are optimistic about the requirement for short-term funds in the fourth quarter of 2023, highest since the inception of index in 2012.

• 52% of CFOs are optimistic about the availability of funds in the market in the fourth quarter of 2023, highest in 11 quarters.

• 42% of CFOs in the industrial sector expect the operating margin of the company to decrease in the fourth quarter of 2023, 9 percentage points lower than the third quarter.

The Dun & Bradstreet India Composite CFO Optimism Index analyses the optimism level of CFOs on 12 parameters, according to the statement.

These parameters are 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, it said.

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