New Delhi, Aug 26 — The 2X surge in mergers and acquisitions shows the resilience of India, with companies increasingly using acquisitions to scale faster, enter new markets and acquire capabilities that would take longer to build organically, a Crisil Ratings report showed on Wednesday.
What sets this cycle apart is the stronger credit backdrop supporting deal-making. Moderating organic capex, lower leverage and prudent funding have strengthened balance sheet flexibility, enhancing companies' ability to absorb acquisition-related risks, said the report.
“Indian corporates are increasingly using M&As to accelerate growth, expand market access and acquire capabilities that would take years to build organically. This is reflected in annual deal volumes, which have more than doubled since fiscal 2017,” said Subodh Rai, Managing Director, Crisil Ratings.
The momentum is broad-based, though shaped by sector-specific priorities. For instance, pharma and healthcare, enterprise technology, artificial intelligence, and consumer businesses are using acquisitions to bridge technology, talent, and intellectual-property gaps.
In contrast, cement and metals are pursuing acquisitions for consolidation, reducing build times from four-six years to one-three years.
The resilience of India Inc has been forged through a volatile operating environment over the past decade, marked by frequent disruptions and shorter recovery cycles.
“Companies have not only sustained revenue growth and profitability during these periods but also strengthened their balance sheets. Median net debt-to-Ebitda for corporates rated by us is estimated at 1.3 times last fiscal, compared with 2.4 times in fiscal 2017,” said the report.
At the same time, companies are pursuing organic growth initiatives more selectively amid geopolitical complexities and the resulting demand uncertainties. This reflects a disciplined approach to capital allocation rather than a diminished appetite for growth.
Moreover, healthy capacity utilisation and lower leverage have preserved balance sheet flexibility, leaving companies with ample headroom for future investments, the report mentioned.
“Acquisitions have largely been translated into stable or positive credit outcomes. Around three-fourths of ratings were reaffirmed or upgraded following acquisitions, and about 60 per cent of acquirers deleveraged on or ahead of plan within two years,” said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.
Looking ahead, India Inc's success will depend on balancing inorganic expansion with organic capability building while continuing to invest in innovation, technology and competitive strength.