S&P Global Ratings in a report said the business groups such as Birla, Mahindra, Hinduja, Hero, ITC, Bajaj and the Murugappa groups have a record of conservative growth. File 
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“India’s large business groups will spend about $800 billion on growth over the next 10 years, almost triple of what they spent over the prior decade,” S&P Global Ratings said in a report on Monday (October 14, 2024.)

“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 centres,” Neel Gopalakrishnan, Credit Analyst, S&P Global Ratings, said.

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“The Vedanta, Tata, Adani, Reliance and JSW groups alone are prepping about $350 billion of investment in these sectors over the next decade,” he said.

Stating that many of the other conglomerates will focus more on their established businesses, with an emphasis on boosting scale and profitability, S&P Global Ratings in the report said the business groups such as Birla, Mahindra, Hinduja, Hero, ITC, Bajaj and the Murugappa groups have a record of conservative growth. 

“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 that seen over the past two years,” it said. “The opportunity for growth for Indian conglomerates is huge,” said Mr. Gopalakrishnan. 

“But 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. 

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, as per the report.