Indian Conglomerates Poised For $800 Bln Investment Push, S&P Says
The spending focus will be on new businesses like green hydrogen, clean energy, aviation, semiconductors, EVs and data centers
(The Corner Office Journal) -- S&P Global Ratings said Indian conglomerates are likely to spend about $800 billion on growth over the next 10 years, almost triple what they spent over the prior decade.
"About 40% of Indian conglomerates' spending over the coming decade will be on new businesses, such as green hydrogen, clean energy, aviation, semiconductors, electric vehicles (EVs) and data centers,” Neel Gopalakrishnan, credit analyst at S&P, said in a statement.
The Vedanta, Tata, Adani, Reliance and JSW groups alone are prepping about $350 billion investment in these sectors over the next decade, he added.
S&P said several other conglomerates will focus more on their established businesses, with an emphasis on boosting scale and profitability. The Birla, Mahindra, Hinduja, Hero, ITC, Bajaj and Murugappa groups have a record of conservative growth, it noted.
The rating agency said Indian conglomerates will likely invest about $400 billion-$500 billion over the next 10 years in existing businesses, if they continue investing at a similar rate as seen over the past two years.
Gopalakrishnan said the opportunity for growth for Indian conglomerates is huge. However, the heavy spending on investment also presents risk -- execution risk, and the risk of borrowing heavily on technology with unproven commercial payoff, such as green hydrogen, he added.
S&P said as absolute debt levels rise, firms will need to continuously strengthen their core businesses to maintain their credit profiles. Any underperformance during the investment phase would likely hit credit metrics, it noted.
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