Indian conglomerates are gearing up for a huge investment, with capital commitments expected to reach around USD 800 billion over the next decade, as reported by S&P Global Ratings.
This investment strategy is nearly three times the amount these large business groups have spent in the past ten years, indicating a strong drive towards growth and diversification.
Around 40 percent of this planned expenditure will be allocated to new and emerging sectors, including green hydrogen, clean energy, aviation, semiconductors, electric vehicles (EVs), and data centers.
Leading the way are the Vedanta, Tata, Adani, Reliance, and JSW groups, which are collectively planning to invest about USD 350 billion in these growth areas over the next decade.
Neel Gopalakrishnan, a credit analyst at S&P Global Ratings, stated, “About 40 per cent of Indian conglomerates’ spending over the coming decade will be on new businesses, such as green hydrogen, clean energy, aviation, semiconductors, electric vehicles (EVs) and data centers. The Vedanta, Tata, Adani, Reliance and JSW groups alone are prepping about US$350 billion of investment in these sectors over the next decade.”
While some of India’s largest conglomerates are concentrating on new sectors, many others are likely to continue focusing their investments on established areas, aiming to grow in scale and improve profitability.
The report indicates that companies like Birla, Mahindra, Hinduja, Hero, ITC, Bajaj, and Murugappa, which are known for their conservative growth strategies, are expected to maintain this approach.
S&P Global Ratings estimates that investments in existing businesses could range between USD 400 billion and USD 500 billion over the next decade, assuming these companies maintain their investment pace from the last two years.
Focusing on strengthening core operations will be essential for these conglomerates as they manage the risks associated with such large-scale investments.
As debt levels are likely to increase to support these growth initiatives, companies must continuously strengthen their core businesses to maintain their credit profiles.
Any underperformance during this investment phase could adversely affect credit metrics, highlighting the importance for these conglomerates to effectively implement their growth strategies.
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