CFOs Brace for Rising Financial Risks in Q2 2023

Dun & Bradstreet India’s Composite CFO Optimism Index remained unchanged on a quarter-on-quarter
basis and increased by 4.5% on a year-on-year basis during Q2 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 has decreased but optimism for macro-economic condition has
increased over the previous quarter.

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 macro-economic scenario, overall scenario for mergers and acquisitions, and level of
financial risks for businesses.

Key findings from the survey:
 The Composite CFO Optimism Index remained unchanged on a quarter-on-quarter basis.
 48% of CFOs stated an increase in demand for short term funds, highest since Q2 2012 (since
the index was introduced).
 Optimism amongst CFOs for the long-term funds in Q2 2023 were highest since Q2 2021.
 52% of CFOs are optimistic for mergers and acquisitions, highest in five quarters.
 Only 12% of CFOs expect level of financial risk on their balance sheet to decrease in Q2 2023,
lowest since Q2 2012 (since the index was introduced).
 The CFO Optimism Index for services sector surged to a four-quarter high, while it fell for the
industrial sector from the previous quarter.

Commenting on the findings of the survey, Dr. Arun Singh, Global Chief Economist, Dun &
Bradstreet, said, "Optimism among CFOs remained largely unchanged in Q2 2023 compared with the
previous quarter. The increase in optimism for funding needs was mainly offset by a perceived increase in
the level of financial risks along with a fall in optimism for profitability and liquidity position. Profit margins
are likely to be affected by increasing financing and labor costs. Besides, businesses will experience
challenges due to weak external demand and the probable impact of the heatwave and El Nino on rural
demand. On a cautious note, a surge in the need for short-term funds, an indicator for working capital,
could also indicate tightening of cash flow conditions as optimism for liquidity and profitability fell sharply
from the year-ago value.”

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

Internal Use Only

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.

About Dun & Bradstreet:
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Dun & Bradstreet Information Services India Private Limited is headquartered in Mumbai and
provides clients with data-driven products and technology-driven platforms to help them take faster and
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