Strike it when it’s hot: GST-linked sectors, banks, IT can be good bets for M&As
NEW DELHI: Reliance Jio’s fierce competition resulted in a tectonic shift in the domestic telecom industry, which has seen a number of merger & acquisition (M&A) deals among incumbents such as Idea Cellular and Vodafone India and Reliance Communications and Aircel, besides Bharti Airtel’s Tikona buyout, a set of developments that analysts had been predicting for the whole of past decade.
With competition rising and more companies seeking cost synergies, M&A activity is set to rise in India this calendar.
Oil & gas, banking, mid-sized IT and GST-linked sectors such as leather and ceramics could witness a spare of M&A deals, analysts predicted in an ETMarkets.com poll.
There have been talks of a merger between HPCL and oil giant ONCG besides State Bank of India merging five associate banks with itself with effect from April 1.
Data suggests the value of announced mergers & acquisition (M&A) deals involving Indian companies hit a record $72.4 billion in 2016, up 97.1 per cent on a YoY basis. It surpassed the $67 billion worth of M&A deals announced in 2007, thanks to consolidation, restructuring and asset sales in the industry.
The average M&A deal size for these transactions reached $120.0 million in 2016, compared with $68.7 million last year. There were 15 deals above $1 billion involving Indian companies in 2016 against four in 2015.
VK Sharma, Head of Private Client Group (PCG), HDFC securities, said: “Reforms – including the GST, FDI – sops for Digital India, robust domestic consumption and growth are likely to push M&A activity and we expect the deal numbers to be much more this year compared with last year.”
“GST implementation will lead to consolidation in staffing, ceramics and leather industries. We also feel the banking sector will see a large number of M&A deals as large banks seek to gobble up smaller lenders.”
Vaibhav Agrawal, Head of Research & ARQ at Angel Broking, expects GST implementation to bring in consolidation in select industries.
G Chokkalingam, Founder & MD at Equinomics Research & Advisory, said given that IT companies are struggling to grow revenues in double digits, mid-sized IT companies may well be M&A targets.
Pankaj Pandey, Head of Research, ICICI Securities, expects cheaper availability of credit, surplus liquidity in the system and challenges in certain competitive industries to drive M&A activity next financial year.
With competition rising and more companies seeking cost synergies, M&A activity is set to rise in India this calendar.
Oil & gas, banking, mid-sized IT and GST-linked sectors such as leather and ceramics could witness a spare of M&A deals, analysts predicted in an ETMarkets.com poll.
There have been talks of a merger between HPCL and oil giant ONCG besides State Bank of India merging five associate banks with itself with effect from April 1.
Data suggests the value of announced mergers & acquisition (M&A) deals involving Indian companies hit a record $72.4 billion in 2016, up 97.1 per cent on a YoY basis. It surpassed the $67 billion worth of M&A deals announced in 2007, thanks to consolidation, restructuring and asset sales in the industry.
The average M&A deal size for these transactions reached $120.0 million in 2016, compared with $68.7 million last year. There were 15 deals above $1 billion involving Indian companies in 2016 against four in 2015.
VK Sharma, Head of Private Client Group (PCG), HDFC securities, said: “Reforms – including the GST, FDI – sops for Digital India, robust domestic consumption and growth are likely to push M&A activity and we expect the deal numbers to be much more this year compared with last year.”
“GST implementation will lead to consolidation in staffing, ceramics and leather industries. We also feel the banking sector will see a large number of M&A deals as large banks seek to gobble up smaller lenders.”
Vaibhav Agrawal, Head of Research & ARQ at Angel Broking, expects GST implementation to bring in consolidation in select industries.
G Chokkalingam, Founder & MD at Equinomics Research & Advisory, said given that IT companies are struggling to grow revenues in double digits, mid-sized IT companies may well be M&A targets.
Pankaj Pandey, Head of Research, ICICI Securities, expects cheaper availability of credit, surplus liquidity in the system and challenges in certain competitive industries to drive M&A activity next financial year.
