S&P Global Ratings said in a report that the business groups such as Birla, Mahindra, Hinduja, Hero, ITC, Bajaj and Murugappa groups have a record of conservative growth. File | Photo credits: Photo: Twitter/@SPGlobalRatings
“India’s major business groups will spend about $800 billion on growth over the next decade, almost triple what they spent over the past decade,” S&P Global Ratings said in a report on Monday (Oct. 14, 2024).
“About 40% of Indian conglomerates’ spending over the next decade will be on new businesses such as green hydrogen, clean energy, aviation, semiconductors, electric vehicles (EVs) and data centres,” said Neel Gopalakrishnan, credit analyst at S&P Global Ratings . , said.
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“Vedanta, Tata, Adani, Reliance and JSW groups alone are preparing around $350 billion of investments in these sectors over the next decade,” he said.
S&P Global Ratings said in the report that many of the other conglomerates will focus more on their established businesses, with an emphasis on increasing scale and profitability. groups have a record of conservative growth.
“Indian conglomerates are likely to invest around $400-500 billion in existing businesses over the next decade if they continue to invest at a similar pace as in the last two years,” the report said. “The growth opportunities for Indian conglomerates are enormous,” said Mr Gopalakrishnan.
“But the high capital expenditures also come with risks – execution risks and the risk of borrowing heavily for technology with unproven commercial results, such as green hydrogen,” he added.
As absolute debt levels rise, companies will need to continually strengthen their core businesses to maintain their credit profiles. Any underperformance during the investment phase would likely impact credit metrics, according to the report.
Published – Oct 14, 2024 3:11 PM IST
