Of the top 10 largest constituents of the MSCI India index, two are conglomerates and one is part of Tata Group – the largest Indian conglomerate of them all.

A business structure which has gone out of the fashion in the West is clearly still very much alive and kicking in India – which is the star performer among emerging markets in recent years.

As a brief reminder conglomerate businesses typically involve a parent group under which there are a variety of different businesses in operating in different industries. Often they will be multinational too.  

The argument in favour of a conglomerate structure is diversification – so if one part of the business is performing poorly others can pick up the slack. Downsides include multiple layers of management, a lack of focus and issues with transparency.

According to a October 2024 S&P Global Ratings report, Indian conglomerates are set to spend $800 billion over the next 10 years – almost triple their investment over the previous decade. The investment is expected to focus on areas like green hydrogen, clean energy, electric vehicles and semiconductors.

MEET THE BIG LISTED INDIAN CONGLOMERATES

Tata Consultancy: This IT services outfit is the largest of 16 listed companies under the Tata Group umbrella which have a combined market value running into hundreds of billions of dollars.

Reliance Industries: Headquartered in Mumbai, its businesses include energy, natural gas, petrochemicals, retail, telecoms, mass media and entertainment and textiles.

Larsen & Toubro: Has interests in areas like industrial technology, heavy industry, engineering, construction, manufacturing, financial services, information technology, defence

This outlook is part of a series being sponsored by Templeton Emerging Markets Investment Trust. For more information on the trust, visit www.temit.co.uk

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