Indian IT firms to step up acquisitions to boost growth: Standard & Poor Ratings report
Advertisement
Indian IT companies are likely to step up acquisitions to make their competitive position strong and boost growth, a report by Standard & Poor's Ratings Services said on Tuesday.
The report, 'Moderating Growth And Rising Cash Put Acquisitions On Indian IT Companies' Radar', identified two key drivers foracquisition - moderating revenue growth and access to new technology and new markets or business segments.
"The high cash levels and low debt at Indian IT companies should help them seek opportunities to acquire larger companies than they have in the past, it said.
However, it noted a drawback too - the limited track record of IT companies in making large acquisitions that can expose them to risks in integrating employees and businesses.
"We expect the larger Indian IT companies to maintain their financial discipline and conservative leverage despite possible acquisitions. We also expect them to maintain their competitive edge on growth and margins over their global peers," said Standard & Poor's credit analystAbhishek Dangra .
The report said increasing competition, a slowing global economy, and the already large scale of top Indian IT companies will result in moderate organic growth.
"We expect revenue growth for Indian IT companies to remain at 8-12% a year over the next one to two years," said Standard & Poor's credit analyst Ashutosh Sharma.
The rating agency said in its view, shareholder distributions by larger Indian IT companies are likely to remain moderate compared with their global peers. However, payouts by Indian companies are likely to be higher than historical levels, it added.
(Image credit: BCCL)
Advertisement
The report, 'Moderating Growth And Rising Cash Put Acquisitions On Indian IT Companies' Radar', identified two key drivers for
"The high cash levels and low debt at Indian IT companies should help them seek opportunities to acquire larger companies than they have in the past, it said.
However, it noted a drawback too - the limited track record of IT companies in making large acquisitions that can expose them to risks in integrating employees and businesses.
"We expect the larger Indian IT companies to maintain their financial discipline and conservative leverage despite possible acquisitions. We also expect them to maintain their competitive edge on growth and margins over their global peers," said Standard & Poor's credit analyst
Advertisement
"We expect revenue growth for Indian IT companies to remain at 8-12% a year over the next one to two years," said Standard & Poor's credit analyst Ashutosh Sharma.
The rating agency said in its view, shareholder distributions by larger Indian IT companies are likely to remain moderate compared with their global peers. However, payouts by Indian companies are likely to be higher than historical levels, it added.
(Image credit: BCCL)
Advertisement
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- FSSAI in process of collecting pan-India samples of Nestle's Cerelac baby cereals: CEO
- India's e-commerce market set to skyrocket as the country's digital economy surges to USD 1 Trillion by 2030
- Top 5 places to visit near Rishikesh
- Indian economy remains in bright spot: Ministry of Finance
- A surprise visit: Tesla CEO Elon Musk heads to China after deferring India visit
- Unemployment among Indian youth is high, but it is transient: RBI MPC member
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market