India Inc sharpens focus on core segments through divestitutures, demergers

livemint.com:

Subscribe to enjoy similar stories. Bengaluru/Mumbai: Stick to your knitting. This is the adage many large companies are reverting to as several divestments and demergers play out in the corporate arena.

Some of them are also making acquisitions in core areas to strengthen the primary lines of business. The objective: unlock shareholder value, reduce debt, and strengthen balance sheets. In recent months, Hindustan Unilever, Bharti Enterprises, Adani Enterprises, L&T, and the Tata Group, among many others, have been selling off non-core assets to focus on core competencies.

It is a trend that industry executives expect will accelerate going forward due to favourable market conditions. What's driving this trend? Devarajan Nambakam, co-head of India investment banking at Goldman Sachs, said evolving market dynamics, including interest rates remaining high and a desire to unlock value from legacy businesses, is behind the surge. “This is likely to continue in 2025 as companies recalibrate their portfolios to navigate a rapidly changing economic environment and prioritize long-term growth opportunities," he added.

Also read | Tata Motors demerger: PB Balaji could unify Tata’s new auto businesses under Tata Sons According to Pramod Kumar, chief executive officer and head of investment banking of Barclays India, these deals are happening because of increasing shareholder expectations—both institutional and promoters—and increasing professionalisation of management. “Competitive intensity in businesses has increased and there is a greater need to focus management bandwidth on core strengths to remain competitive," Kumar said. “And last but not the least, the valuations are attractive today and there could not be a better time