A significant proportion of Chief Executive officers (CEOs) polled by the Confederation of Indian Industry (CII) are upbeat about overall business outlook for first half of FY23 despite headwinds such as further monetary tightening and heightened inflationary expectations.

Reflecting on their own company prospects, a major share of the CEOs revealed an upbeat sentiment—as many as 44 per cent of them felt that their respective company’s revenue growth would be in the range of 10 to 20 per cent during first half of FY23, followed by another 32 per cent of the CEOs anticipating a bigger jump in revenues, of more than 20 per cent during the same period.

This optimism was echoed on the profits-front as well, with 45 per cent of the CEOs indicating that their company’s profit growth is likely to increase more than 10 per cent, closely followed by 40 per cent of them believing that profit growth may stand slightly lower, up to 10 per cent, during H1 FY23. 

The CII conducted this survey at its Second National Council Meeting for FY23 in Delhi, which saw a participation of 136 CEOs from across the country.

“The CII CEOs’ Poll results clearly demonstrate the resilience of Indian industry and the positive business performance outlook both on domestic as well as exports front despite challenges of high inflation leading to monetary tightening, rising input prices and uncertain global economic conditions,” Chandrajit Banerjee, Director General, CII, said.

Delving deeper into the reason behind this overall buoyant profit outlook, the survey revealed that 46 per cent of the CEOs polled indicated that rising input prices would affect their profits between 5 per cent and 10 per cent during H1 FY23, followed by another 28 per cent of them who expect a bigger hit to their profits, between 10 per cent and 20 per cent. 

However, when polled on their output prices, only 43 per cent of the CEOs indicated that their companies had increased output prices to accommodate the input price rise in recent months, while nearly 57 per cent of them either absorbed the input price rise and of these about 30 per cent of them improved efficiency thereby reducing costs of their output. 

On the jobs front, a majority of the CEOs expected improved job creation prospects in their companies during H1 FY23 as compared to the same period last year.

On inflation

The survey respondents have also cited high inflation expectations as nearly half of them (48 per cent) foresee inflation to be in the range of seven to eight per cent during H1 FY23. In view of the current stresses, in terms of high input prices and inflation, nearly two thirds of them (64 per cent) are of the view that now the State governments must act to reduce value added tax (VAT) on fuel after the cut in excise duty by the Centre in May.

Further, GDP growth is expected to be in the range of seven to eight per cent as revealed by 57 per cent of the CEOs, while only 34 per cent of them anticipate below 7 per cent expansion in the economy. 

On the demand front, it is encouraging to note that about half of the CEOs (49 per cent) felt that rural demand would be better in H1 FY23 as against the corresponding period last year.

On the external front, while a large share of the CEOs expect a further depreciation in the rupee and expect it to stand at more than ₹80/US dollar during H1 FY23, a majority of them (55 per cent) of them also expect their exports to benefit from it and perform better in H1 FY23 versus last year’s levels.

However, on the imports front, about 50 per cent of the CEOs indicated mild to moderate disruption in supply of inputs during the first half of the current year compared to first half of last year.

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