NEW DELHI: India’s mergers and acquisitions (M&A) market is witnessing a shift in deal-making priorities, with companies increasingly favouring smaller, strategic acquisitions over large-ticket transactions as market volatility, valuation concerns and changing growth priorities reshape investment decisions.
India’s year-to-date M&A deal value in calendar 2026 fell more than 19% to $95.5 billion from $118.5 billion a year earlier, according to data compiled by the London Stock Exchange Group (LSEG). However, deal volumes remained largely unchanged, suggesting that investor appetite is holding up even as companies become more selective in deploying capital.
The emphasis is increasingly on acquisitions that fill capability gaps, provide access to new markets or strengthen existing businesses, rather than transactions driven purely by scale.
Weak equity markets and geopolitical uncertainty have further influenced deal timelines and valuations. For listed companies, subdued stock prices also make acquisitions harder to justify, particularly when they involve paying a significant premium.
“Investors are not buying growth for growth’s sake. They are circumspect,” said Nitin Gupta, partner, consumer products & retail, investment banking, EY India. Companies are increasingly identifying white spaces and capability gaps before pursuing acquisitions, he said, adding that larger transactions are taking longer to close as buyers scrutinise valuations and strategic fit.
The shift is particularly visible in the consumer sector, where established companies are looking to acquire digital-first and direct-to-consumer (D2C) brands. Companies such as Marico, Emami, Dabur and Hindustan Unilever have pursued acquisitions in recent years to tap newer consumer segments and strengthen their digital capabilities.
“Large consumer companies are looking to acquire smaller brands to access new capabilities, product innovation and emerging consumption categories,” said Anand Ramanathan, partner and consumer industry leader, Deloitte South Asia.
Beyond consumer businesses, the focus on strategic fit is also shaping deal-making in healthcare, technology and infrastructure, although larger transactions remain possible where assets offer clear long-term value.
In August, global private equity firm KKR, for instance, agreed to acquire a 100% stake in Medicover India, the Indian hospital division of Sweden’s Medicover AB, in a $1.3 billion transaction. The acquisition gives KKR access to an established network of 24 hospitals and 4,800 beds, with a presence concentrated in south and west India.
In technology, meanwhile, acquisitions by large domestic conglomerates and IT companies are facing closer scrutiny. Buyers are increasingly prioritising firms with capabilities in cloud infrastructure, generative AI and niche software-as-a-service (SaaS) platforms over businesses dependent on legacy technologies, investment banking sources said.
Infrastructure transactions are also increasingly taking the form of asset monetisation through Infrastructure Investment Trusts (InvITs), with operating road assets and renewable energy transmission projects attracting institutional investors such as CPPIB and Brookfield.
For consumer businesses, the absence of large consolidation deals does not necessarily indicate a slowdown, Ramanathan said. Limited opportunities to consolidate established players, alongside the growing scope for experimentation, are supporting smaller acquisitions.
Naveen Malpani, partner and retail & e-commerce industry leader at Grant Thornton Bharat, said the decline in deal values reflected more selective capital deployment rather than a complete loss of investor interest. “Capital is increasingly flowing towards differentiated brands, category leaders and businesses with established market positioning,” he said.
This approach is likely to continue into 2027, Gupta said. While companies remain committed to inorganic growth, a recovery in capital markets and greater geopolitical stability will be important in reviving larger transactions. For now, the focus is firmly on acquiring capabilities, with valuation discipline taking precedence over scale.
Source: The Financial Express
