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PF data acts as a leading indicator for identifying distressed companies: Heckyl study

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Companies from consumer services, industrials and financial sectors lead drop in PF score in FY20

Publicly available data from Employees’ Provident Fund Organization (EPFO) is one of the datasets that can be very useful to gain unique insights in the assessment of credit risk. In our view, a significant delay in monthly Provident Fund (PF) payment is a potential red-flag as the delay could be due to liquidity crunch faced by the company. Moreover, a substantial drop in the number of employees or amount paid for PF is also a potential red-flag as it signals layoffs or job cuts to reduce the company’s operational cost.

Heckyl’s Risk Analytics System (RAS) has several business rules to identify such red-flags from PF data. Based on the rule output of the PF module for the company, Heckyl system computes the PF score.

Heckyl study on PF data for 1,000 companies has shown a drop in the PF score for 540+ companies during the financial year 2020. The companies from consumer services, industrials, financial institutions, commercial services and chemical sectors have led the drop in the PF score for the FY20.

Sector-wise PF Score

Moreover, 310+ companies, which have witnessed a fall in the PF score, have subsequently seen declined in the scores for other modules of RAS such as Financial, Charges, Credit Rating, Directors, Ownership, and GST. Read the rest of this entry »

Consumer Services, Industrials and Consumer Discretionary Companies Lead Credit Rating Downgrades

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Heckyl’s analysis of the credit rating data for 4,000 companies has shown that the Companies from Consumer Services, Industrials, Consumer Discretionary, Financial Institutions and Commercial Services sectors have dominated the credit rating downgrades from Jan. 1, 2020 to Apr. 10, 2020.

Credit Ratings is one of the Datasets that has been captured in Heckyl’s Risk Analytics System (RAS) for both public and private Indian companies. Our system monitors the changes in a company’s credit ratings on a day-to-day basis. Moreover, our rule-based engine triggers alerts based on changes in the credit rating.

Sector-wise Company Downgrades

RAS has identified 120+ companies downgraded by the credit rating agencies from Jan. 1, 2020 to Apr. 10, 2020. Out of the total, the ratings for 27 companies have been downgraded from Investment Grade to Speculative Grade. From the list of 27 companies, the ratings for 4 corporates have been downgraded to Default from Investment Grade. Read the rest of this entry »

COVID-19: Developed Countries to Absorb Economic Shock Sooner than Developing Nations

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With a rapid surge in the number of cases and mounting death toll, the coronavirus pandemic is wreaking havoc across the globe. So far, COVID-19 has claimed more than 1,25,000+ lives and has infected over 2 million people in more than 200 countries and territories around the world.

The death toll and the number of people infected by COVID-19 shows that the developed nations are the worst affected compared with the developing countries. The US led the number of casualties from Coronavirus, followed by Italy, Spain, France and the UK. These 5 countries constituted nearly 3/4th of the total number of deaths due to Coronavirus.

The rapid spread of Covid-19 has forced the governments around the world to announce Lockdowns, which has not only impacted the lives of people but also halted the overall global growth. The closure of plants and operations announced by companies from almost all the industries led to a short-term collapse in the global output.

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) has recently said that global growth will turn “sharply negative” in 2020, as COVID-19 has disrupted the world’s social and economic order “at lightning speed and on a scale that we have not seen in living memory”.

Though the developing countries have not witnessed major casualties, the economic shock triggered by COVID-19 will have devastating impact on both the formal and informal sectors of the economy.

On the other hand, the developed countries, with their financial might, are better placed to absorb the economic shock compared to the developing economies.

Heckyl’s Analysis of News Sentiment around Economic Indicators has also shown that the Developing Countries are most vulnerable to Economic shock than the Developed Countries.

India, Bangladesh, Indonesia and Philippines have recorded a downtrend in the Economic News Sentiment (200-DMA) after a spike in the number of coronavirus cases in March’2020 and subsequent announcement of Lockdowns.

On the contrary, the US has shown an improvement in its Economic News Sentiment helped by an announcement of Rate Cut and Liquidity Measures by the Fed along with USD 2 Trillion stimulus plan unveiled by the US government to cope up with the impact of the coronavirus crisis.

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Auto, Transportation, Consumer Services, Industrials and IT Sectors Hit Hard by Coronavirus

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In January this year, China witnessed an outbreak of Coronavirus which has now infected more than 8,50,000 people globally. So far, Coronavirus has claimed the lives of more than 42,000 people. The rapid spread of Coronavirus across 199 countries and territories has forced the governments announced the lockdowns. Almost all the sectors were impacted by the lockdowns.

Analysis of unstructured datasets such as News can be very useful to unravel red-flags such as plant shut down, layoffs, supply disruption, lawsuits, drop in earnings, product recalls, regulatory actions etc. ahead of time.

We conducted analysis of news data on Coronavirus to measure its impact on the sectors. Our analysis showed that Automobile, Transportation, Consumer Services, Industrials and Software & Services were the worst hit sectors due to lockdown announced by Indian government to stop the spread of Coronavirus.

Sector News Vol Read the rest of this entry »

IT, Metals, Industrial Mfg. witness a steep fall in news sentiment in H2 CY19

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Heckyl Risk Analytics System is the first of its kind innovative application that provides early warning signals through analysis of traditional and alternative datasets for identifying distress sectors and companies ahead of time.

We have developed Sector News Sentiment Score in our Risk Analytics System for identifying the first sign of stress or green shoots of recovery in sectors. At the same time, our application offers deep-dive analytics on sectors through analysis of news flow under various categories.

Moreover, our application also helps in identifying the best and the worst performing companies within each sector through analysis of news sentiment.

To show the capabilities of our Risk Analytics System, we have prepared Sector News Report. Here, we present some of the key insights from the report:

Sector sentiment_Feb 15 - Fall

Sector sentiment:
#1. IT, Metals, Industrial Manufacturing and Telecom sectors have registered a steep fall in sentiment average in H2 CY19.

#2. Automobile sector sentiment average recorded the third consecutive sequential drop in H2 CY19.

#3. Chemicals, Pharma, Textiles and Fertilizers sectors’ news sentiment averages bounced back in H2 CY19.

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