India's tech deal volumes hit 5-quarter high in Q1 FY27 as transactions jump 18%; deal value at $2.5 billion: Grant Thornton

India's technology sector staged a strong rebound in deal activity during Q1 FY27 (April-June 2026), with transaction volumes climbing to their highest level in five quarters even as overall deal values moderated due to the absence of mega-ticket acquisitions seen in the preceding quarter. The sector recorded 80 deals worth US$ 2.5 billion during the quarter, marking an 18% sequential increase in transaction volumes, according to Grant Thornton Bharat's latest Technology Dealtracker.

While aggregate deal value declined 35% quarter-on-quarter, the report attributed the moderation primarily to the absence of large outbound acquisitions that had boosted the previous quarter. Instead, Q1 FY27 saw broader participation across Mergers and Acquisitions (M&A) and private equity (PE), with investors continuing to deploy capital into Artificial Intelligence (AI), enterprise technology and digital infrastructure companies backed by strong fundamentals and long-term growth prospects.

AI, cybersecurity bets drive strategic acquisitions

M&A activity strengthened during the quarter, with 28 deals worth US$ 996 million, as transaction volumes rose 33% sequentially. Strategic acquisitions remained concentrated around AI, cloud computing, cybersecurity and digital engineering capabilities, while outbound transactions reflected Indian technology companies' continued push to strengthen global capabilities.

The quarter also witnessed the highest start-up M&A activity in the past six quarters, signalling growing strategic interest in acquiring innovation-led businesses instead of building capabilities organically.

Private capital pivots to AI, digital infrastructure

Private equity and venture capital activity remained robust, with 52 deals worth US$ 1.5 billion during Q1 FY27. Investment value surged 81% quarter-on-quarter, driven largely by Nxtra Data's US$ 1 billion fundraise, while investor interest remained firmly centred on AI, enterprise technology and digital infrastructure.

Public market fundraising, however, remained subdued, with no IPO or QIP issuances during the quarter—the first such quarter since Q2 2023. Despite the lull in capital markets, companies with strong profitability, proven business models and clear earnings visibility continued to attract sizeable private capital.

Technology Services emerged as the largest contributor to overall deal value, supported by resilient M&A activity and the US$ 1 billion PE transaction. Meanwhile, Enterprise Software/SaaS witnessed a sharp recovery in strategic acquisitions, with M&A volumes rising from one deal in the previous quarter to seven, while PE investment values more than doubled as investors continued to favour scalable software businesses with recurring revenue models.

The quarter also saw Sarvam AI enter the unicorn club following its US$ 83 million fundraise, highlighting sustained investor confidence in India's AI ecosystem.

Commenting on the findings, Raja Lahiri, Partner and Technology Industry Leader at Grant Thornton Bharat, said the five-quarter high in deal volumes reflected a more balanced technology deal market driven by strategic intent rather than a handful of marquee transactions.

"Companies continue to invest in capabilities across AI, cloud and digital engineering, while investors are backing businesses with strong fundamentals and clear growth potential. We expect this disciplined approach to support sustained deal activity in the coming quarters," Lahiri said.