Mergers and acquisitions in India have surged, with deal volumes doubling since 2017, driven by sectors like pharmaceuticals, healthcare, and AI. However, successful integration and execution remain critical to unlocking value, according to Crisil Ratings.
Crisil Ratings says mergers and acquisitions have become a far more central part of India Inc’s growth playbook, with annual deal volumes more than doubling since fiscal 2017. The agency said companies are increasingly using takeovers to speed up expansion, widen market access and obtain capabilities that would take years to build internally.
The analysis, which covered about 600 transactions worth more than Rs 500 crore each across 20 sectors, excluded financial services, infrastructure, inbound deals and those led by private equity. Crisil said the strongest appetite for deals is coming from sectors such as pharmaceuticals, healthcare, enterprise technology, artificial intelligence and consumer businesses, where acquisitions are being used to fill gaps in technology, talent and intellectual property.
But the agency also stressed that dealmaking does not automatically create value. In its review of 100 large debt-funded acquisitions, Crisil said roughly two-thirds broadly met expectations, while about one-third failed to deliver the intended results.
According to the agency, the main obstacles are not strategic intent but execution. Integration problems remain the biggest risk, followed by regulatory delays and complications in cross-border deals. Crisil said success depends on disciplined integration, quick capture of synergies and careful use of debt, adding that companies which managed post-deal integration well were better placed to protect credit quality.
The rating agency’s deputy chief ratings officer, Manish Gupta, said most acquisitions have so far led to stable or better credit outcomes. He said about three-quarters of ratings were reaffirmed or upgraded after acquisitions, while around 60% of acquirers reduced debt on time or earlier than planned within two years. That, Crisil said, suggests the balance-sheet strain often feared in leveraged deals can be contained when execution is strong.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
