India’s largest conglomerates closed 2025 on a strong note, driving growth through a mix of strategic acquisitions and heavy capital expenditure. Their activity underlined a broader trend: household names are investing to transform portfolios, scale operations and capture new markets. At the same time, advisers and market watchers warn that the path ahead requires careful balance—especially around debt levels and leadership transition—as these groups gear up for sustained growth in 2026.
Mergers and acquisitions: bold moves to reshape portfolios
M&A stayed front and center for conglomerates last year. Rather than small bolt-on deals, many companies pursued larger, transformational transactions to enter new sectors or strengthen core businesses. Common themes included technology adoption, renewable energy, logistics and consumer-facing assets.
- Diversification with a purpose: Deals often aimed to reduce exposure to cyclical segments by adding recurring-revenue businesses or high-growth digital plays.
- Vertical integration: Some groups sought to control more of their value chain—from raw materials and manufacturing to distribution—to improve margins and resilience.
- Cross-border expansion: Select acquisitions abroad were used to access new markets and capabilities, though these came with integration and regulatory challenges.
Capital expenditure: investing for scale and efficiency
Capex plans were ambitious. Investments flowed into manufacturing capacity, renewable projects, data centers, and logistics networks. The tempo of spending suggested a long-term view: rather than chasing short-term returns, many conglomerates focused on building infrastructure that would support growth over the next decade.
- Upgrading factories and expanding capacity to meet rising domestic and export demand.
- Funding green-energy projects and decarbonization efforts as part of ESG commitments and to lower operating costs.
- Investing in digital systems—automation, cloud and analytics—to improve productivity and customer reach.
Resilience amid global headwinds
Despite higher borrowing costs in parts of the world, supply-chain disruptions and geopolitical uncertainty, these groups displayed notable resilience. Several factors helped:
- Portfolio diversification: A mix of industries and geographies helped cushion shocks in individual sectors.
- Domestic demand tailwinds: Healthy consumer and investment demand at home provided a reliable revenue base.
- Operational agility: Faster adoption of technology and adaptive sourcing reduced exposure to long supply-chain interruptions.
Risks to watch: overleveraging and integration headaches
Experts are upbeat about growth but cautious. The largest risk is overleveraging. Heavy deal-making and elevated capex financed by debt can strain balance sheets, especially if macro conditions tighten or returns take longer than expected.
- Interest-rate sensitivity: Higher rates raise financing costs and pressure earnings if debt is large.
- Deal integration: Poorly integrated acquisitions can destroy value—culture clashes, systems mismatch and execution slippage remain common pitfalls.
- Valuation risk: Paying top dollar in hot sectors increases the burden to deliver superior growth to justify prices paid.
Succession planning: a business priority, not an afterthought
As founders and first-generation leaders age, succession planning moved up the agenda. Market observers stressed that clear, credible succession processes are vital for long-term stability and investor confidence.
Best practices being adopted include:
- Formalized governance structures and independent boards to provide checks and continuity.
- Transparent timelines and role definitions for handing over operational control.
- Developing internal leadership pipelines and attracting external professional managers where needed.
- Family councils or advisory bodies to align stakeholders and reduce conflicts.
Why succession matters for growth
Strong succession planning reduces uncertainty, helps retain talent, and ensures strategy continuity. For conglomerates making big capital calls and complex acquisitions, predictable leadership transitions are especially important to keep execution on track.
What to expect in 2026
Looking ahead, several trends are likely to shape how these groups perform:
- Quality over quantity in deals: Expect more selective M&A focused on strategic fit and clear synergies rather than headline-grabbing volumes.
- Gradual de-leveraging: Firms are likely to prioritize balance-sheet repair and free-cash-flow generation after years of heavy spending.
- Stronger ESG and tech play: Renewables, circular economy initiatives and digital transformation will continue to attract capital.
- Focus on corporate governance: Transparent succession and professional management will become differentiators for investors.
Investor and corporate takeaways
- For investors: Look beyond headline growth to assess balance-sheet strength, deal rationale and management depth.
- For companies: Prioritize disciplined capital allocation, build robust integration plans and formalize succession mechanisms.
- For leaders: Communicate clear roadmaps for growth and transition to inspire confidence among stakeholders.
India’s conglomerates enter 2026 in a position of strength but not without challenges. The next phase will reward companies that combine ambition with prudence—those that can invest boldly while keeping leverage in check and ensuring smooth leadership transitions will be best placed to sustain growth over the long term.