Investors Find Their Way Back to Retail & Consumer Checkout Aisle

India's retail and consumer sector is buzzing again, recording its highest deal activity in three years in the first quarter (Q1) of 2025.

- JADEN MATHEW PAUL

Deal value rose to $5.7 billion, up 26.6 percent from Q1 of 2023, while deal volume hit 289 transactions—a 41.6 percent jump, according to Bloomberg data.

Experts say that after a period of capital market frenzy and sky-high valuations that made private deals challenging, rationalisation is bringing investors back. Private equity (PE) firms, conglomerates, and strategic buyers are now eyeing opportunities to plug portfolio gaps, tap rising aspirational demand, and build on long-term consumption tailwinds in the world's fastest-growing major economy.

"The sector has almost always attracted both buyers and investors," said Nitin Gupta, partner, EY. Until recently, high valuations and initial public offering (IPO) hype made private deals unattractive, but as valuations normalise, investor interest in private opportunities is picking up, he said.

"In the past few months, valuations have become slightly more reasonable. But compared to other key sectors, the consumer space still carries among the highest valuations," said Ravi Swarup, partner, Bain & Company.

Underlying this renewed interest is the long-term allure of India's consumer market, projected to reach $4.3 trillion in spending by 2030.

"The sector reflects aspirations of a young, rapidly transforming demographic—more working women, rising middle-class entrants in Tier-II and Tier-III cities, and a tendency to buy higher-end products that offer better margins," said Ketan Dalal, managing partner, Katalyst Advisors.