Indian conglomerates poised for $800bn investment push: S&P Global Ratings

New Delhi: Indian conglomerates are gearing up for a massive investment wave, with capital commitments projected to reach approximately $800 billion over the next decade, according to a S&P Global Ratings report.

This investment plan is nearly three times the amount spent by these large business groups in the previous ten years, signaling a strong push toward growth and diversification.

Around 40 per cent of this planned spending will be directed toward new and emerging sectors such as green hydrogen, clean energy, aviation, semiconductors, electric vehicles (EVs), and data centers.
The Vedanta, Tata, Adani, Reliance, and JSW groups are leading this charge, collectively preparing to invest about US$350 billion in these growth areas over the next decade.

Neel Gopalakrishnan, S&P Global Ratings credit analyst said, "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 focusing on new business sectors, many others are expected to continue investing primarily in their established business areas, aiming to expand scale and enhance profitability.

The report suggests that companies like the Birla, Mahindra, Hinduja, Hero, ITC, Bajaj, and Murugappa groups, known for their conservative growth strategies, will maintain this approach.

S&P Global Ratings projects that investments in existing businesses could reach between USD 400 billion and USD 500 billion over the next ten years, assuming these companies continue their investment pace from the past two years.

This focus on strengthening core operations will be crucial for conglomerates as they navigate the risks associated with the large-scale investment push.

As debt levels are likely to rise to support these growth plans, companies will need to bolster their core businesses continuously to sustain credit profiles.

Any underperformance during the investment phase could negatively impact credit metrics, making it essential for these conglomerates to execute their growth strategies effectively.