Retail deal values fall 59% to $1.5 bn in Q1 2026; volumes rise 21% to 146

India’s retail deal activity picked up pace in the March quarter, but the money behind those deals tells a different story. Deal volumes rose sharply even as total values fell, pointing to a market that is active but cautious, with investors choosing smaller, more strategic bets over big-ticket transactions.

According to a report by Grant Thornton Bharat, the sector recorded 146 deals worth $1.5 billion in Q1 2026, including one public market transaction. Volumes rose 21% from 120 deals in the previous quarter, while values dropped 59% from $3.4 billion, pointing to what the firm described as a “measured recovery”.

“Q1 2026 reflects a phase of measured recovery in India’s consumer and retail sector, with deal volumes rebounding even as capital deployment remains selective,” said Naveen Malpani, partner and consumer industry leader at the firm. He added that investors are prioritising “profitability-led growth, premiumisation and brand-led strategies”.

The top five deals alone accounted for 57% of total deal value, highlighting how a handful of large transactions continue to dominate even as average deal sizes shrink. Personal care and textiles, apparel & accessories led activity in volume terms, together accounting for 39% of total deals, while FMCG and food processing dominated in value, contributing nearly half of overall deal value.

Clear shift towards smaller, strategic deals

The divergence between rising volumes and falling values was visible across both mergers and acquisitions and private equity activity. M&A deals rose to 40 transactions worth $358 million in Q1, up 18% in volume from the previous quarter but down 33% in value from $532 million. The increase was driven largely by domestic consolidation and outbound deals, particularly in food processing, personal care and FMCG segments.

The largest transaction in this category was Hindustan Unilever acquiring a 49% stake in Zywie Ventures for $90 million.

Private equity activity remained the backbone of dealmaking, accounting for 105 deals worth $1.1 billion. Volumes rose 22% quarter on quarter, while values fell sharply by 64% from $2.9 billion. Investors are clearly recalibrating. Instead of large, high-risk bets, capital is flowing into mid-sized, growth-stage companies with clearer paths to profitability.

The biggest PE deal of the quarter was General Atlantic picking up a 7% stake in Balaji Wafers for $278 million.

Premiumisation and food drive investor interest

Sector trends show a consistent pattern. Food processing, personal care and FMCG continue to attract the bulk of investor attention. Food processing led M&A volumes with 13 deals, followed by personal care with 10 and FMCG with eight. In value terms, personal care topped M&A at $155 million, while FMCG dominated PE investments at $347 million.

According to the report, the evolving FTA landscape is expected to further shape the competitive intensity in personal care, with reduced import barriers likely to facilitate greater entry of global brands and widen product access for consumers.

At the same time, food processing has also remained a strong draw for investors, with eight deals totalling $257 million, reflecting sustained interest in branded and value-added food businesses.

Malpani noted that changing consumer preferences towards nutrition, transparence, and trusted brands are shaping this trend. “Categories such as personal care and food processing continue to attract strong interest, driven by evolving consumer preferences around health, convenience and premium offerings,” he said.

At the same time, digital-first brands and e-commerce platforms continued to see funding momentum, particularly those aligned with health and premium positioning.

However, not all segments saw equal enthusiasm. Textiles and apparel recorded steady deal volumes but lower values, while retail tech and consumer services remained subdued, signalling caution in discretionary and emerging areas.

India’s retail dealmaking engine is running again, activity is back, but discipline is tighter, and scale no longer seems to be the primary driver of investor interest. “As macroconditions stabilise, the sector is poised for more balanced growth, with strategic consolidation and targeted investments shaping the next phase of evolution,” added Malpani.