Infosys scouting for more acquisitions post-in-tech deal, eyes opportunities in data analytics

Infosys growth: India's second-largest IT services company is scouting for more acquisitions following the conclusion of two key deals this year. CEO Salil Parekh said that the company continues to eye more opportunities in areas like data analytics and SaaS, where it is building scale in Europe and the US Parekh told PTI in a recent interview that future buyouts could be of the size of its recent in-tech purchase, which was valued at 450 million euros.

"I think those would be the size that we will look at in terms of scale, and given our structure, we could do a few of those," Parekh said when asked if more acquisitions on the scale of in-tech were possible.

In January, Infosys acquired InSemi Technology Services, which is a company in India dealing with semiconductor designing services, and agreed to pay an amount of up to Rs 280 crore. A larger acquisition occurred in April when Infosys Germany, a 100 per cent subsidiary, acquired in-tech Holding, an R&D provider in engineering services from Germany, for a purchase price of up to 450 million euros (around ₹4,045 crore).

"We have already built a very strong engineering services business as part of Infosys, and with these two acquisitions — one being a semi-conductor and another one in automotive — we're making some important additions," Parekh said.

Parekh stated that Infosys is now looking actively at multiple acquisition targets. Parekh said that the company will place emphasis on strategic synergies, financial viability, cultural compatibility, and ease of integration. He said that though the company has a strong balance sheet and is generating good cash, it is not sure about the timing of new deals.

"We continue to look, and we have things that are normally in the pipeline, but those take their own time," Parekh said. Much of the activity is in terms of discussions around strategic fit, financial cost, cultural fit, and how, with the integration, a few of those might play out. Many of those discussions will go on and we'll see what comes out.

Asked if more acquisitions could be closed within this fiscal year, Parekh was circumspect. "It's difficult to say. we are looking at several but to get a fit in terms of the strategic parameters, the financial parameters, the culture, the integration. all of it may not work out," he said.

A Grant Thornton Bharat Dealtracker Q2 2024 report states that dealmaking activity in India increased to 501 deals valued at $21.4 bln in the second quarter. While volumes were considerably higher, overall values dropped as there was a lack of very large merger and acquisition transactions. Domestic deals spearheaded growth, while cross-border deals decreased along both dimensions of volume and value.

With PTI Inputs