India Inc biggies set to invest US$ 800 bn in a decade: S&P Global Ratings

Indian conglomerates, including major players like Reliance Industries, Adani, Tata, and JSW, are poised to invest approximately US$ 800 billion over the next decade, nearly tripling their expenditure compared to the last ten years, as reported by S&P Global Ratings. About 40% of this investment is anticipated to flow into emerging sectors such as green hydrogen, clean energy, semiconductors, and electric vehicles (EVs). However, the ratings agency warns that these ambitious investments carry significant risks, including execution challenges and the potential for increased debt associated with technologies that have yet to demonstrate commercial viability. The report emphasizes that as debt accumulates, these conglomerates must strengthen their core operations to maintain stable credit profiles, as any shortfall in performance during this critical phase could adversely affect their credit metrics.

While some conglomerates, like Vedanta, Tata, Adani, Reliance, and JSW, are expected to allocate around US$ 350 billion to forward-looking sectors over the next decade, others, including Birla, Mahindra, and Bajaj groups, are likely to focus on consolidating their established businesses with an emphasis on scaling and profitability. The Tata group stands out due to its strong cash flows and reserves, allowing it to fund new ventures more independently, while other companies may rely on external capital for expansion. The report indicates that up to 50% of future investments could be financed without increasing leverage, contingent on steady EBITDA growth, with the remainder sourced from a mix of debt and equity financing. As these conglomerates navigate their investment strategies, they remain vigilant, ready to adjust their plans should specific technologies underperform.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.