1/3/2020 Industry confidence fell sharply in Q2 - Times of India

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1/3/2020 Industry confidence fell sharply in Q2 - Times of India

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Industry confidence fell sharply in Q2

TNN | Jan 2, 2020, 12:52 IST

(Representative image)MUMBAI: Industry confidence has fallen sharply in the quarter ended September 2019 to the lowest level in six quarters.According to a report by rating agency CARE, its Confidence Index has fallen sharply due to negative responses onexpectations of revenue, pricing power, rating changes and interest coverage.

The expectations are most negative in the respect of revenue, ratings and interest coverage. The only area where there hasbeen a net positive response is on expectations of operating margin.

The overall confidence index which stood at 118.4 in Q1FY19 dipped to 114.9 in Q2FY19 and slipped further to 108.6 inthe third quarter of FY19. The fourth quarter saw a rebound in sentiment with the index improving to 110.1.

1/3/2020 Industry confidence fell sharply in Q2 - Times of India

https://timesofindia.indiatimes.com/business/india-business/industry-confidence-fell-sharply-in-q2/articleshow/73067059.cms 3/11

However,since then there has been a sharp deterioration in sentiment with the index slipping to 93.4 in the Q1FY20 andfurther down to 80.6 in Q2FY20.

CARE Ratings has been coming out with the index based on a survey of analysts tracking 46 industries. The response isimproved, worsened or remained same based on predefined criteria. The index is based on net responses that are obtainedfrom the difference of the percentage of respondents expecting improvement from the percentage of those expectingdeterioration.

“The net response for revenue parameter was 57% during Q2FY19, which indicated higher proportion of industriesreporting positive growth in revenue in that quarter. But the same for Q2FY20 is -54%, which indicates decline by 103percentage points over the last one year and decline of 41 percentage points after Q1FY20,” said Madan Sabnavis, chiefeconomist, CARE, in the report.

“The index for Q2FY20 substantiates the current economic downturn and its impact on various parameters on industries,”he added.

The interest coverage ratio, on which most respondents were pessimistic, reflects the debt serviceability or theimprovement or decline in finance costs for the industry. CARE Rating’s modified credit ratio shows that more downgradesmay be in the offing. The modified credit ration (MCR) tells upfront whether the industry has done well in terms of therating changes. Here, CARE’s own MCRs are used to gauge the extent to which the confidence levels are better or worse.The factors taken to arrive at an outlook includes but is not limited to: impact of currency movements, commodity prices,policy both local as well as global, capacity addition and utilisation.

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1/3/2020 Industry confidence fell sharply in Q2 - Times of India

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1/3/2020 Industry confidence fell sharply in Q2 - Times of India

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1/3/2020 Industry confidence fell sharply in Q2 - Times of India

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