Why This Analyst Thinks Indian Enterprises Buying European Cos Is An 'Orange Or Yellow Flag'

Indian companies acquiring European businesses have often presented these deals as opportunities to expand globally, access technology and enter developed markets.

But a review of 15 such acquisitions has raised questions about whether the price paid and the profitability delivered justify the capital deployed.

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In a November 3 post on X, investor and analyst Ishmohit Arora highlighted the weak financial outcomes of several overseas acquisitions.

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Online platform Cofactco, agreeing with his assessment, said on X that 10 of the 15 transactions ended in write-downs, forced sales, insolvency or debt restructuring. The review suggests that buying European companies deserves an “orange or yellow flag” when assessing capital allocation.

Tata Steel's acquisition of Corus stands out. Its European business lost money in nine of its first 12 years. Suzlon bought REpower for around 1.4 billion euros and later sold it for 1 billion euros. Dr Reddy's paid 480 million euros for Betapharm, which was subsequently valued at just 90 million euros.

Other deals also struggled. United Spirits acquired Whyte & Mackay for 595 million pounds before selling it for 430 million pounds.

Wockhardt's acquisitions of Negma in France and Pinewood in Ireland contributed to financial pressure and debt restructuring by 2009. JSW Steel attempted to sell its Italian steel assets four years after acquiring them.

Indian companies buying European cos should be viewed with a healthy dose of skepticism given European operations are rarely as profitable and if things get worse. Impairment costs can come.. In my books, it's a yellow to orange flag on capital allocation

— ishmohit (@ishmohit1) November 3, 2026

Agree with Ishmohit. We went through 15 European acquisitions by Indian companies, from Reliance's Trevira deal in 2004 to Tata Motors closing Iveco last week. Ten ended in write-downs, forced sales, insolvency or debt restructuring. Tata Steel's European business lost money in nine of its first 12 years. Suzlon paid about €1.4bn for REpower and sold it for €1bn. Dr Reddy's paid €480m for betapharm, and four years later it was on the books at €90m. Wockhardt borrowed to buy Negma in France and Pinewood in Ireland, and was in debt restructuring by 2009. United Spirits bought Whyte & Mackay for £595m and sold it for £430m. JSW Steel tried to sell its Italian steel assets four years after buying them. His point on profitability shows up even in a good year. In FY26, Tata Steel's Indian business made a 24% EBITDA margin. The Netherlands, in its best year in a while, made 4.4%. The UK lost money. The other deals are hard to call successes today. JLR, the best of the lot, lost £244m after tax in FY26 and burned about £1bn of cash last quarter. Apollo's European business made a 0.7% EBIT margin. Motherson's polymer division, which includes Peguform, made 6.9% EBITDA against 8.8% for the group. What those three had going for them was the entry price. Motherson paid about €25m for a mirror maker with $750m of revenue. Tata bought JLR for less than half what Ford had paid for it. When a business earns low single-digit margins, the price you pay decides most of the return. So yes, at least a yellow flag. Iveco was bought with debt, from a seller that wasn't forced to sell. That's what Corus and REpower looked like too.

— Cofacto (@cofactodotai) November 3, 2026

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Purchase Price Often Determines The Outcome

The review also questioned the profitability of more recent acquisitions. Tata Steel's European business recorded a 4.4% EBITDA margin in FY26, while its UK operations continued to lose money.

JLR reported a post-tax loss of 244 million pounds in FY26 and burned around 1 billion pounds in cash during the last quarter.

Apollo Tyres' European business generated an EBIT margin of just 0.7%. Motherson's polymer division, which includes Peguform, delivered a 6.9% EBITDA margin against 8.8% for the group.

The analyst argued that acquisition prices matter even more when businesses operate on low margins. Motherson paid around 25 million euros for a minor German business generating 750 million euros in revenue, while Tata bought JLR for less than half the price Ford had paid.

The warning is not that every overseas acquisition will fail. Rather, weak profitability, expensive valuations and debt-funded purchases can turn global expansion into a costly capital-allocation decision.

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