India’s M&A Activity Soars 14% To Three-Year High In February On Attractive Valuations: Grant Thornton Bharat

India’s deal activity jumped 14% month-on-month to a three-year high in February in terms of volumes, defying the underperformance of the country’s capital markets amid economic uncertainty, as per the data compiled by Grant Thornton Bharat.

According to experts, the surge was mainly driven by more attractive valuations in a correcting market, spurring mergers and acquisitions and private equity deals despite broader market volatility.

"Deal volumes across the M&A landscape, including private equity, have gone up over the last four months as valuations slowly became more attractive in a correcting market," said Nipun Lodha, director of corporate finance, at Prabhudas Lilladher Investment Banking.

February saw 226 merger and acquisitions and private equity deals valued at $7.2 billion, recording a 5.4-fold increase in value compared to the same month last year, the Grant Thornton Bharat data showed. However, on a month-on-month basis, the deal values were down by 4%.

The retail and consumer sector recorded its highest monthly deal volumes since January 2022, driven by textiles, apparel, and e-commerce deals.

"In fact, there is a strong perception that India will work out a mutually beneficial free trade agreement with the US, mitigating any material impact of tariff’s on the overall outlook for the Indian economy. Hence, deal activity continues at a strong pace," added Samir Bahl, chief executive officer – investment banking at Anand Rathi Advisors.

Primary market activity, meanwhile, saw a significant dip in volumes. The initial public offering and qualified institutional placement volumes dropped 67% and 57%, respectively on a month-on-month basis owing largely to economic uncertainty, geopolitical tensions, disappointing corporate earnings, and regulatory changes.

Domestic deals remained the dominant theme, accounting for 68% of volumes and 78% of values for the month of February.

Zen Technologies Ltd. and Nitco Ltd. each acquired four companies, contributing to M&A volume growth. The month's top deal was ONGC-NTPC Green joint venture's acquisition of Ayana Renewable Power Pvt. at an enterprise value of Rs 19,500 crore.

The month also saw high-profile deals like Torrent Group's acquisition of a 67% stake in IPL team Gujarat Titans, Praana Group’s acquisition of the glass reinforcement business of Owens Corning Inc., Sun Group’s acquisition of England-based cricket club Northern Superchargers and L&T Finance Ltd.'s acquisition of Paul Merchants.

"The month also saw 141 private equity deals worth $2.42 billion, which indicates continued momentum in smaller transactions," Grant Thornton Bharat said.

Cross-border activity was also notable, with outbound deals witnessing a month-on-month increase of 32% by value to nearly $1 billion, while volumes rose 55%.

The Union Budget proposals including tax incentives for startups and MSMEs, increased capital expenditure allocations and sector-specific initiatives, are likely to be key drivers for deal activity over the next year.

"Initiatives announced in the Union Budget 2025, including the National Manufacturing Mission and the push for self-reliance in key industries, are expected to attract substantial investments to the manufacturing sector in the future," Grant Thornton Bharat highlighted.