Dun & Bradstreet Composite CFO Optimism Index

Dun & Bradstreet Composite CFO Optimism Index: The Composite CFO Optimism Index for Q3 2017 is at one and a half year low

Only 41% of CFOs expressed optimism about liquidity position of their companies – lowest since Q2 2014

Mumbai, Sep 12, 2017: Dun & Bradstreet, the world’s leading provider of global business information, knowledge and insight conducted a pan India survey of Chief Financial Officers (CFOs) in which they were asked about their confidence in the overall financial and macro-economic conditions for Q3 2017 (Jul-Sep of the calendar year 2017), as compared to the same quarter of the previous year. The survey reveals how optimistic the CFOs are with respect to the overall financial health of their respective companies, the business risk environment and the macroeconomic scenario in the country. 

The survey revealed interesting facts about CFOs’ perspective on the overall business climate in the country:

• The Composite CFO Optimism Index for Q3 2017 is at one and a half year low. The Index for Q3 2017 declined by 11.0% on a y-o-y basis and by 5.7% on a q-o-q basis
• Optimism amongst CFOs deteriorated more for the financial performance of their companies compared to the overall macroeconomic condition
• At sectoral level, both the optimism indices for the services sector and the industrial sector are at one and a half year low
• Optimism of CFOs in both the services and industrial sector for the financial performance of their companies remains downbeat since the beginning of 2017.
• Only 27% revealed risk appetite to increase in Q3 2017 – lowest in 5 quarters
• Optimism for cost of raising funds remained weak for Q3 2017. Around 35% of CFOs expect cost of raising funds to decrease – lowest in 11 quarters
• 59% of CFOs anticipate level of financial risks for corporate sector as a whole to remain unchanged as compared to last year - highest since Q2 2012
• Only 19% of CFOs stated reducing leverage to be their top most priority during the next six months compared to 69% in Q1 2017
• 54% of CFOs indicated reducing cost as their priority compared to 88% during the beginning of the year i.e. Q1 2017
• Percentage of CFOs stating expansions plans as their priority has reduced considerably during Q3 2017 compared to the beginning of the year i.e. Q1 2017 - organic expansions (25% in Q3 vs 60% in Q1 2017), expansion through M&A (17% in Q3 vs 40% in Q1 2017) and capex plan (18% in Q3 vs 52% in Q1 2017)

Commenting on the findings of the survey, Manish Sinha, Managing Director – India, Dun & Bradstreet stated that “Concerns related to subdued domestic and weak external demand, strain in the corporate balance sheet, stressed assets in the banking system and the pressure on public finances appear to have contributed to the lower optimism level. For some CFOs, execution of the Goods & Services Tax (GST) system seem to have taken a toll on their optimism scores. Further, strain in the corporate balance sheets have added to the already weak risk appetite of the CFOs, consequently their expansion plans remain muted - which also has an impact on the optimism score. Looking forward, we anticipate that the remonetisation measures, restocking post GST implementation, the onset of the festive season, state pay commission hikes and the lower lending rates might result in some tailwinds for the CFO Optimism scores”