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India’s markets are dominated by massive companies, with the highest 10% by income usually commanding greater than 90% of internet income. This began altering after the covid-19 pandemic, as smaller companies clawed their means up amid a wider enterprise rebound. However this fightback is now operating out of steam.
In 2024-25, firms exterior the highest 10% bucket accounted for 7.3% of the combination internet revenue earned by the universe of BSE-listed companies, a Mint evaluation of 5,096 firms confirmed. There was no enchancment in the course of the earlier two years. Does this imply the repeat of the pre-pandemic sample: David vs Goliath showdowns amongst Indian companies?
It’s nonetheless early days to say so: These smaller companies—the lengthy tail comprising 90% of listed firms—are nonetheless higher off on this metric than they had been earlier than the pandemic-led disruptions. For context, their common share was 4.0% simply earlier than the pandemic, in comparison with 8.3% now.
Whereas bigger firms get pleasure from the advantages of economies of scale and a aggressive edge, mid-sized and smaller ones have managed to go away a deeper mark lately. “India Inc. remains to be concentrated, however no more concentrated than 5 years in the past,” stated Jayakrishnan Pillai, a companion at consulting agency Deloitte India. “The height in revenue skewness throughout 2021 has since reversed.”
He additionally famous that smaller companies had proven stronger revenue development lately, thus broadening the earnings base. Nevertheless, the struggles of smaller firms don’t finish right here. Many sectors are nonetheless dominated by one or two firms, and the rising urge for food for mergers and acquisitions (M&As) places smaller firms in danger.
Section shifts
The smaller firms are nonetheless taking an even bigger slice of the revenue pie than 5 years in the past, however the enormous sector-wise variation means that the pattern just isn’t broad-based. Of the 20 sectors as per Mint’s classification, 11 really recorded a smaller share within the revenue pool in FY23-FY25 in comparison with FY17-FY19. Among the many sectors during which area shrank for smaller firms had been agriculture, monetary sectors, building and actual property, infrastructure and engineering, and logistics.
A pointy improve in smaller companies’ share in textiles, journey, and hospitality, and retail pulled up the general share. This will have been pushed by the sharp pent-up demand that India witnessed when the results of the pandemic-induced lockdowns pale. Textiles and journey and hospitality are already much less dominated by larger firms (prime 10% account for 41% and 56% of income, respectively), leaving room for smaller firms to capitalize on the post-pandemic growth.
Titans’ take
Regardless of the current churn, the Indian listed firms’ universe sees focus in lots of segments and, in some instances, a heavy dominance of 1 or two gamers. For instance, smaller firms have gained share within the journey and hospitality sector, however the sector remains to be dominated by Indian Railway Catering and Tourism Corp. Ltd (IRCTC), which takes residence 60% of the sector’s mixture revenue pie. Within the packaged client items section, ITC Ltd alone instructions about 50% of the share.
Eight out of 20 sectors have one firm alone accounting for greater than 33% of the combination revenue share of their respective sectors. Three of those are dominated by public sector undertakings—IRCTC, Container Corp. of India Ltd, and NTPC Ltd. If the bucket is expanded to incorporate firms commanding 25-33% share, 4 extra sectors—brokerages, client durables, building and actual property, and oil and fuel—will make the record.
Additional consolidation?
As smaller firms are continuously preventing for survival, a rising urge for food for M&As places them prone to being taken over by larger firms. In the course of the pandemic, a number of smaller firms confronted losses, filed for chapter, and had been taken over by larger gamers within the section, analysts stated.
Nevertheless, the current uptick in M&A exercise goes past misery shopping for of bancrupt firms—it has extra to do with strategic shifts to drive development, particularly since Indian firms are sitting on an enormous pile of money. Mint reported on 6 July that 285 BSE-listed firms alone had been holding ₹5.09 trillion in money in 2024-25.
“There may be hesitation to spend money on new greenfield massive initiatives as a result of prevailing uncertainties and geopolitical state of affairs,” stated Jyoti Prakash Gadia, managing director of Resurgent India, a class I service provider financial institution. “Nevertheless, there may be urge for food for M&A because the consolidation course of includes lesser threat and will help beat competitors, create synergies, and enhance effectivity and profitability.”
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