CFOs remain optimistic about financial performance despite escalating geopolitical tensions

Dun & Bradstreet India’s Composite CFO Optimism Index increased by 9.1% on a
q-o-q basis during Q4 2023.

Mumbai, November 22, 2023: 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 same period last 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.

Key findings from the survey:

• The Composite CFO Optimism Index stands at 103.7, 9.1 percentage points higher on a q-o-q basis.
• Overall optimism for financial performance stands at 99.0 in Q4 2023, highest in 8 quarters.
• Optimism for overall macroeconomic scenario decreased for the industrial sector by 6 percentage points (q-o-q).
• Optimism for the global macro-economic scenario has diminished, with 33% of respondents expecting it to decrease in Q4 2023, compared to 37% in Q3 2023.
• 52% of CFOs are optimistic about the requirement for short term funds in Q4 2023, highest since the inception of index in 2012.
• 52% of CFOs are optimistic about the availability of funds in the market in Q4 2023, which is highest in 11 quarters.
• 42% 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.

Commenting on the findings of the survey, 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."