Early warning system

Heckyl Risk Score Negative for 11 Companies from Nifty 50 Index

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Heckyl’s Risk Analytics System (RAS) has shown that the 11 out 50 Nifty companies have earned negative risk scores. The list of companies having negative risk scores was topped by Zee Entertainment, followed by Vedanta and Mahindra & Mahindra.

On the other hand, the Heckyl risk score has been the strongest for HDFC Bank in Nifty 50 companies. HDFC Bank was followed by HCL Technologies and Bajaj Finserv.

Image 1: Heatmap for Nifty 50

RAS is a useful tool for corporate lenders to get a 360-degree view on the portfolio companies through analysis of traditional and alternative data modules.

Zee Entertainment’s risk score turned negative in September last year. Since then, the risk score for Zee Entertainment has been on the downtrend.

A further deep-dive into the break-up of risk score in RAS has shown that the negative 100 scores for ownership, credit ratings and stock price modules have dragged Zee Entertainment’s overall risk score lower. Moreover, negative scores for directors and provident fund modules also weighed on the risk score.

Image 2: Risk Overview for Zee Entertainment

RAS is the first of its kind innovative application that helps corporate lenders to get a 360-degree view on the portfolio companies through analysis of traditional and alternative data modules.

Heckyl RAS Spots Multiple Red-Flags on Alternative Data Ahead of Deterioration in Financials

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The deterioration in financials of the company did not happen overnight. There are one or more events happening internally and/ or externally in a span of time that could hamper the company’s operations. Moreover, the impact of events is known only at the later stage after the announcement of financial results.

Tracking multiple events involving the large number of corporate borrowers in portfolio is a daunting task. In our view, the analysis of Alternative Datasets such as PF, Ownership, Directors, News Sentiment, Credit Rating, GST, Charges etc. can offer an Early Warning Signal to spot deterioration in financials ahead of time.

Heckyl’s Risk Analytics System (RAS) offers 360-Degree view on Risk Assessment of Portfolio Companies by capturing and analyzing 1. Delay in Employees’ Provident Fund (PF) contribution; 2. Adverse Media and News Sentiment; 3. Changes in the Promoter Ownership or Pledging; 4. Director Resignations; 5. Delay in GST filing; 6. Credit Rating; and 7. Creation of New Charge on Assets in addition to Financial Data.

Here, we highlight the top 10 companies which have witnessed multiple red-flags ahead of decline in Financial Score.

Timeline_Concise
RAS 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.

To know more about Heckyl RAS, email us  at info@heckyl.com.

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 »

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 »