- Indian companies doubled annual M&A deal volumes since fiscal 2017, says Crisil Ratings
- M&As now target talent, technology, and intellectual property across diverse sectors
- Pharma, AI, and tech firms seek capabilities; cement and metals focus on consolidation
Indian companies are increasingly turning to mergers and acquisitions as a faster route to growth, technology and new market opportunities, with annual deal volumes more than doubling since fiscal 2017, according to Crisil Ratings.
The shift reflects a broader change in corporate strategy. Acquisitions are no longer being used solely for expansion. Companies across artificial intelligence, enterprise technology, pharmaceuticals, healthcare and consumer businesses are using deals to acquire specialised talent, intellectual property and technology that could take years to develop internally.
Crisil's assessment covers around 600 deals worth more than Rs 500 crore each across 20 sectors. The analysis excludes financial services, infrastructure, private equity-led transactions and inbound deals.
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“Indian corporates are increasingly using M&As to accelerate growth, expand market access and acquire capabilities that would take years to build organically,” said Subodh Rai, MD at Crisil Ratings.
The objectives vary across industries. Pharma, healthcare, AI and enterprise technology companies are primarily pursuing acquisitions to gain capabilities and intellectual property.
Consumer businesses are also using acquisitions to strengthen their market position, while cement and metals companies are pursuing deals for consolidation and to accelerate capacity creation.
According to Crisil, acquisitions can reduce the time required to build new capacity from around four to six years to one to three years.
The M&A push is also being supported by healthier corporate balance sheets. Median net debt-to-EBITDA among around 3,200 Crisil-rated companies stood at about 1.3 times in the last fiscal, compared with approximately 2.4 times in fiscal 2017.
However, Crisil cautioned that completing a deal does not guarantee business success. Its review of 100 large debt-funded acquisitions found that about two-thirds broadly met expectations. Successful transactions delivered scale expansion of 20% to 80% within one to two years, while margins improved from the second year as synergies emerged.
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Among the deals that underperformed, integration problems accounted for about half the cases. Regulatory delays and cross-border execution issues each contributed to roughly one-fifth.
Credit profiles have largely remained resilient. Around three-fourths of ratings were reaffirmed or upgraded after acquisitions, while about 60% of acquirers deleveraged on or ahead of schedule within two years.
Crisil said India Inc.'s next phase of M&A growth will depend on disciplined capital allocation, effective integration and continued investment in internal capabilities.
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