From mega M&As to aggressive expansion, 2025 was the year of Indian conglomerates. Will the momentum sustain in 2026?

The optimistic outlook at companies such as Adani Group, Reliance Industries, Tata Group, Aditya Birla Group, JSW Group and L&T extends into the new year as they show no let-up in expansion plans and adeptly weather disruptions such as US tariffs.

However, experts warned that they should be careful not to overdo their diversification efforts and plan successions well for longevity.

At the company’s annual general meeting held in late August 2025, Reliance Industries chairman Mukesh Ambani spoke about his company’s growth trajectory, which is echoed in other large businesses. “In just one generation, Reliance has transformed itself from a Fortune 1000 company to a Fortune 40 global powerhouse, creating over $200 billion in value, all in India,” Ambani said. he said. “But the best is yet to come for Reliance. I have promised that we will double Reliance by the end of our Golden Decade, in 2022. In that period, our EBITDA is approx. ₹1.25 lakh crore ($14.6 billion). I reiterate that Reliance will more than double its Ebitda by the end of its Golden Decade in 2027.” Ebitda, short for earnings before interest, taxes, depreciation and amortization, represents a company’s operational profitability.

buying spree

One of the major themes of last year was mergers and acquisitions of India’s leading business companies to drive inorganic expansion in their existing lines or to diversify into entirely new segments.

The first category includes Tata Motors’ acquisition of Italian commercial vehicle manufacturer Iveco for around £40,000 million. ₹40,000 crore and JSW Paints’ acquisition of AkzoNobel India just below ₹13,000 crore. The deals scaled operations at both companies overnight. As Tata Motors became one of the world’s largest commercial vehicle manufacturers, the modest business of JSW Paints suddenly had a seat at the table of India’s largest paint manufacturers.

JSW Energy was also on a spending spree in 2025, acquiring the thermal energy assets of KSK Mahanadi and renewable energy companies O2 Power and Hetero Group, growing its portfolio to over 13 gigawatts of operational capacity with a strong development pipeline, transforming it into one of the largest private power producers in the country.

Other notable acquisitions include Reliance Consumer’s acquisition of the Udhaiyams Agro Foods and Kelvinator brands, and Adani’s acquisition of Vidarbha Industries Power Ltd in Maharashtra and Abbot Point Port in Australia, as well as its last-minute acquisition of Jaiprakash Associates Ltd from Indian bankruptcy courts.

Similarly, Mahindra Group acquired majority stake in light and medium commercial vehicle manufacturer SML Isuzu in India to expand its product portfolio.

Organic expansion, diversification

Perhaps even more impressive was the amount of money Indian conglomerates devoted to capital expenditure to grow their existing businesses.

Adani Group achieves one of the highest corporate sector capital expenditures in a year in India, with record spending target ₹1.5 trillion in FY26 across listed companies. The money goes to investments in renewable energy plants, new airports, ports, data centers, cement factories, copper smelters, thermal power plants, transmission lines and battery storage units.

Last month, group chairman Gautam Adani unashamedly said: “In the coming years, our commitment to mining and materials will expand significantly, from extracting a variety of ores to producing the metals, alloys and finished products that power our economy, drive mobility and enable our nation’s green transition.” He was giving a speech at the Indian Institute of Technology Dhanbad on December 9. Earlier, in a message to shareholders of flagship Adani Enterprises, it had estimated the group’s capital expenditure over the next five years at $15-20 billion.

A similar scale of capital expenditure is being made at Reliance Industries; Mega investments are being made in integrated renewable energy complex in Jamnagar; These investments will produce everything from solar cells to renewable electricity and then use that clean power to power data centers and green hydrogen units.

In fact, investments in data centers have been a recurring theme at other conglomerates such as L&T and Tata Group through Tata Consultancy Services.

While the Aditya Birla Group is continuing its capex to expand its cement, aluminium, copper and paint businesses, Reliance has allocated a significant outlay to its consumer goods businesses.

What gives power to conglomerates?

The agility with which large businesses seized new opportunities while also adapting to external uncertainties ran counter to the wisdom of less than a decade ago, when conglomerates were considered lumbering beasts buckling under the weight of inertia in a rapidly changing world.

Saptarshi Purkayastha, professor of strategic management at the Indian Institute of Management Calcutta, said 2025 is a great year for conglomerates. “As independent businesses, especially in the tech and startup ecosystem, grapple with financing issues and valuation corrections, Indian conglomerates such as Tata, Reliance and Adani have used their strong internal capital to come out ahead,” he said.

Purkayastha and his collaborators found in a study that conglomerates earn an average 6 to 8 percent higher return on assets than independent companies. He said high cash flow from core businesses helps subsidize investments in new sectors.

Another expert said of the conglomerates’ moves that size and agility are not mutually exclusive. “These giants have leveraged deep pockets and multi-sector reach to dominate transformative deals in banking, retail, media, energy and cement,” said Deepankar Sanwalka, senior partner at consultancy Grant Thornton Bharat.

“The message is clear: diversification works. Conglomerates not only survived, they thrived and proved that scale and agility can deliver growth and innovation,” he said.

Purkayastha said the conglomerate structure is growing in India but declining in developed economies because efficient capital markets and other pro-market institutions in developed economies discount the complexity of a conglomerate. In developed economies, investors prefer to diversify their own portfolios rather than paying to a holding company. He said this was due to reduced information asymmetry between investors and managers.

In contrast, in India, large conglomerates act as intermediaries, using their internal capital, workforce and reliable infrastructure with better efficiency in an environment where the external market is more likely to be inefficient.

Semi-national champions

“The core strength of Indian conglomerates is what I call ‘strategic alignment’ with external stakeholders, especially the government. Indian conglomerates have corporate strategies that align with the country’s national priorities, be it oil security (Adani/Reliance), infrastructure building (L&T) or digital sovereignty (Tata/Jio),” Purkayastha said.

Second, these conglomerates are taking advantage of the slowdown in global growth by selling India’s growth story to foreign investors. This gives them access to global debt markets, thus bypassing domestic liquidity constraints, the IIMC professor said.

The scale of these holdings also helps attract strategic foreign partners for new businesses. Like Tata Electronics and PSMC for semiconductors, Reliance and NVIDIA for AI infrastructure, or JSW Group and SAIC for electric vehicles. This helps conglomerates access technology and other proprietary information that can be nearly impossible for independent firms, Purkayastha said.

Considering these reasons, the growth momentum of India’s leading conglomerates is expected to continue into 2026 and in the medium term, according to both Purkayastha and Sanwalka.

But they warned that these business groups should be careful about prudent capital allocation.

“The discipline to prevent diversification into unrelated areas when cash sits idle is a major concern,” Purkayastha said.

Sanwalka listed managing these diversified businesses without losing agility, keeping debt under control and ensuring transparent governance as the main challenges that conglomerates will face in 2026 and beyond.

Finally, most Indian conglomerates are family-run businesses, with exceptions like L&T. Purkayastha said succession planning remains a critical vulnerability for family-controlled conglomerates.