Mergers and acquisitions activity among Indian corporates has surged more than 2x since fiscal 2017, with companies increasingly turning to inorganic growth to scale faster, enter new markets, and acquire capabilities that would take years to build internally, according to a Crisil Ratings report released on 26 August. The findings point to a structurally stronger deal-making environment underpinned by healthier balance sheets and disciplined capital allocation.

What Is Driving the M&A Surge

According to the Crisil Ratings report, the current M&A cycle is distinguished by a markedly improved credit backdrop. Moderating organic capital expenditure, lower leverage, and prudent deal funding have collectively strengthened balance sheet flexibility, giving companies greater capacity to absorb acquisition-related risks without straining their finances.

'Indian corporates are increasingly using M&As to accelerate growth, expand market access and acquire capabilities that would take years to build organically. This is reflected in annual deal volumes, which have more than doubled since fiscal 2017,' said Subodh Rai, Managing Director, Crisil Ratings.

Sector-Specific Priorities Shaping Deal Activity

The momentum is broad-based but shaped by distinct sectoral motivations. Pharma and healthcare, enterprise technology, artificial intelligence, and consumer businesses are deploying acquisitions to bridge gaps in technology, talent, and intellectual property — areas where organic development timelines are prohibitively long.

In contrast, cement and metals are using acquisitions primarily for consolidation, compressing capacity build times from the conventional four-to-six years down to one-to-three years. This reflects a pragmatic calculus: buying existing capacity is faster and, in many cases, cheaper than greenfield construction.

Balance Sheet Strength: A Decade in the Making

The resilience now enabling aggressive deal-making has been built through a turbulent decade marked by frequent disruptions and compressed recovery cycles. According to the report, median net debt-to-EBITDA for Crisil-rated corporates is estimated at 1.3 times in the last fiscal year, sharply down from 2.4 times in fiscal 2017. Companies have sustained revenue growth and profitability through multiple stress periods while simultaneously strengthening their financial positions.

Healthy capacity utilisation and lower leverage have preserved headroom for future investments, even as companies pursue organic growth more selectively amid geopolitical complexity and demand uncertainty. The report frames this selectivity as disciplined capital allocation rather than diminished growth appetite.

Credit Outcomes Largely Positive Post-Acquisition

'Acquisitions have largely been translated into stable or positive credit outcomes. Around three-fourths of ratings were reaffirmed or upgraded following acquisitions, and about 60 per cent of acquirers deleveraged on or ahead of plan within two years,' said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

This track record suggests that, unlike earlier M&A cycles where deal euphoria often outpaced integration capacity, the current wave reflects more measured execution. Notably, the data covers a period that includes the pandemic disruption and subsequent global supply-chain stress — making the credit stability finding particularly significant.

What Lies Ahead for India Inc

Looking ahead, the report cautions that sustained success will require balancing inorganic expansion with continued investment in organic capability building, innovation, and technology. As geopolitical headwinds persist and demand visibility remains uneven, the quality of deal selection and post-merger integration will increasingly separate outperformers from the rest.