Three in four ratings remain stable or improve after deals, underscoring credit resilience
Mumbai, August 26, 2026: Mergers and acquisitions (M&As) are rapidly evolving from an episodic growth lever into a core strategic tool for India Inc to drive scale, build capabilities and strengthen market leadership.
The shift is reflected in rising deal volumes, with companies increasingly turning to acquisitions to scale faster, enter new markets and acquire capabilities that could take significantly longer to build organically.
What sets the current M&A cycle apart is the stronger credit backdrop supporting deal-making. Moderating organic capex, lower leverage and prudent funding have strengthened balance-sheet flexibility, enhancing companies’ ability to absorb acquisition-related risks.
The resilience of India Inc has been built through a volatile operating environment over the past decade, marked by frequent disruptions and shorter recovery cycles. Companies have not only sustained revenue growth and profitability through these periods but have also strengthened their balance sheets. Median net debt-to-EBITDA¹ for corporates rated by CRISIL Ratings is estimated at around 1.3 times last fiscal, compared with around 2.4 times in fiscal 2017.
At the same time, companies are pursuing organic growth initiatives more selectively amid geopolitical complexities and resulting demand uncertainties. This reflects a disciplined approach to capital allocation rather than a diminished appetite for growth.
Healthy capacity utilisation and lower leverage have further preserved balance-sheet flexibility, leaving companies with ample headroom for future investments.
Subodh Rai, Managing Director, CRISIL Ratings, said:
“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 2017².”
The momentum is broad-based, although priorities vary across sectors. Pharma and healthcare, enterprise technology, artificial intelligence and consumer businesses are using acquisitions to bridge technology, talent and intellectual-property gaps. Meanwhile, cement and metals are pursuing acquisitions for consolidation, reducing build times from four-six years to one-three years.
However, execution remains the key differentiator between value creation and credit strain.
“Our review of 100 large debt-funded deals shows two in three deals broadly met our expectations. Successful ones delivered 20-80% scale expansion within one-two years, widened geographic reach and improved margins from the second year as synergies materialised,” added Rai.
Of the remaining one-third of acquisitions that fell short of intended business outcomes, integration challenges accounted for about half the cases, while regulatory delays and cross-border execution issues each contributed to roughly one-fifth of the cases.
The findings underline that a sound strategic rationale alone is not enough to ensure M&A success. Value creation depends on disciplined integration, timely synergy capture and prudent leverage management.
Companies that executed integrations effectively were better positioned not only to realise the benefits of acquisitions but also to manage and contain credit risk.
A few editorial points I would flag
- “Three in four ratings stable or improved” is a strong headline claim, but the body currently doesn’t explain this statistic. I would add a paragraph quantifying the finding if the underlying report has the data.
- “2x surge” vs “more than doubled” — these should ideally be made consistent. If the actual number is exactly around 2x, retain “2x”; otherwise, use “more than doubled.”
- The headline could be made more business-news friendly, for example:
“M&A deals double as India Inc shifts focus to acquisition-led growth: CRISIL Ratings” - The strongest news point may actually be “three in four ratings stable or improved after deals”, because it gives the release a clear credit-risk finding rather than simply describing rising M&A activity.
