Indian companies step up acquisitions for AI, technology and talent: Crisil
The ratings agency said mergers and acquisitions are evolving from an occasional growth option into a core strategic tool for companies seeking to scale faster, enter new markets and acquire capabilities that would take longer to build internally.
Indian businesses are actively increasing their acquisition activity across various sectors, including artificial intelligence, enterprise technology, pharmaceuticals and consumer goods, as highlighted by ratings agency Crisil. This growing trend in mergers and acquisitions is becoming a core strategic tool for companies that aim to scale more rapidly, enter new markets and acquire capabilities that would otherwise take years to develop on their own.
Subodh Rai, managing director at Crisil Ratings, explained that annual deal volumes have more than doubled since fiscal 2017.
The acquisition strategy varies across industries, with pharma and healthcare, enterprise technology, artificial intelligence and consumer sectors using deals to address technology, talent and intellectual property gaps. Cement and metals firms, on the other hand, are pursuing acquisitions to consolidate their positions and shorten build timelines from four to six years to just one to three years.
The current M&A cycle is supported by stronger corporate balance sheets, as companies have managed to lower their leverage and have a more moderate approach to organic capital expenditure.
However, the success of acquisitions largely depends on proper execution, as a review of 100 large deals found that two-thirds of them met Crisil's expectations. Successful acquisitions resulted in a 20-80% scale expansion within one to two years, expanded geographic reach, and improved margins after the second year due to synergies materializing. The remaining one-third of acquisitions that did not meet expectations faced integration challenges, regulatory delays, or cross-border execution issues, according to Rai.
Crisil's Deputy Chief Ratings Officer, Manish Gupta, noted that the credit outcomes following acquisitions have remained resilient, with around three-quarters of ratings reaffirmed or upgraded after acquisitions. Additionally, approximately 60% of acquirers deleveraged on or ahead of their plans within two years. Looking ahead, Crisil emphasized that India Inc's success will depend on balancing acquisition-led expansion with organic capability building and continuing to invest in innovation, technology, and competitive strength.
While M&As can accelerate growth, long-term value creation will ultimately hinge on disciplined capital allocation, strong execution, and sustained investment in core capabilities.
Written by urgent.news from Economic Times Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
