Heckyl Risk Analytics

Heckyl RAS Spots Green Shoots of Recovery in Indian Steel Sector

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Indian steel sector, which has been reeling under severe pressure due to production losses amid COVID-19 lockdown, is beginning to see the light at the end of the tunnel.

Heckyl’s analysis of news data for Indian steel sector has shown an improvement in positive news flow in four major categories – product pricing, production, earnings and imports/ exports in September 2020.

A surge in positive news flow under product pricing led to further improvement in the category sentiment for September 2020. In addition, production and imports/ exports categories have also seen improvement in the category sentiment.

Some of the steel sector news items, which pushed the sentiment higher in Sep-20, have been highlighted below:

2-Sep-20: Steel companies likely to announce price hikes in steel products
2-Sep-20: Steel under spotlight as price inches towards pre-Covid level
4-Sep-20: Fall in coking coal price to boost steel companies’ profit
5-Sep-20: Steelmaking costs to come down by $35/mt in Q2 of FY21, operating margins to improve by 5-6%: Icra
11-Sep-20: Indian Steel Mills Recorded Boosted Sales in August
14-Sep-20: Steel cos hike prices by ₹2,500 a tonne as demand revives in September
15-Sep-20: Steel prices to keep rising on industrial rebound; margins soft
16-Sep-20: Steel Price Hikes Signal More Supply Squeeze than Demand Surge

Unstructured data sets such as News is the first credible source of information that can offer insights into both the present and future prospects of the sectors and the companies. The application of news data in the risk assessment can help in capturing important events and red-flags for both the sectors and the portfolio companies.

Through the analysis of news, Heckyl RAS can help the banks to identify the best and the worst performing sectors ahead of time and thereby help them in rebalancing the sector allocation.

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

Auto, Utilities and Industrials Lead the Volume of Distressed Companies

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The analysis of Altman Z-score for 290 companies from BSE 500 index in Heckyl Risk Analytics System (RAS) revealed that Automobiles, Utilities and Industrials sectors have led the volume of distressed companies in the financial year 2020.

The Altman Z-score is the output of a credit-strength test that gauges the company’s likelihood of bankruptcy. This score measures the performance of the company on profitability, leverage, liquidity, solvency, and activity to predict whether the organization has a high probability of becoming bankrupt.

Based on the value of Altman Z-score, the company cab be classified into three zones. A Z-score above 2.99 suggests that a company is in the safe zone. A Z-score between 1.8 and 2.99 is in the grey zone which suggests there is a good chance of the company going bankrupt. Meanwhile, a Z-score below 1.80 is in the distress zone which indicates a high probability of distress.

Here, we present some of the highlights of Altman Z-score analysis for 290 companies from BSE 500 index which have declared the annual results for the financial year 2020:

#1. Manappuram Finance, Shoppers Stop and Bombay Dyeing fall into Distressed category

#2. Tejas Networks, HEG and AllCargo Logistics slip into Grey zone

#3. Distressed Cholamandalam Investment, Reliance Capital and Can Fin Homes register further Deterioration

Heckyl RAS does all the heavy-lifting to save the time spent by the risk teams at the banks on the collection of various datasets and complex number crunching and thereby helping them to spend quality time on the ready to use output of business rules, financial modules and risk scores.   

Heckyl RAS is the first of its kind innovative application that offers a 360-degree view on the portfolio of companies and individuals through analysis of the traditional and alternative datasets.

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

News Sentiment for 50+ Companies from BSE 500 Hits 2-Year Low

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Unstructured data sets such as News is the first credible source of information that can offer insights into both the present and future prospects of the company. The application of news data in the risk assessment of corporate borrowers helps in capturing important events and red-flags which can have impact on the company’s operations at a later date.

In our view, a significant drop in the company’s news sentiment can be a potential red-flag and at the same time, an early warning signal of future under-performance.
  
Our analysis of news data has shown a steep decline in sentiment score for 50+ companies from BSE 500 Index to a 2-year low. Here, we present the heat-map for top 20 companies witnessing significant drop in news sentiment score.

Heatmap Read the rest of this entry »

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 »