Organic Infrastructure vs. Inorganic Expansion: A Comparative Analysis of Capex-Led and Acquisition-Led Growth Strategies in Leading Indian Corporations (FY20–FY25).

Abstract

This research paper investigates the financial efficacy and risk profiles of two primary corporate growth trajectories: organic Capital Expenditure (Capex-Led) and inorganic business combinations (Acquisition-Led). Utilizing a five-year longitudinal dataset (FY20–FY25) of eleven blue-chip Indian entities—including Reliance Industries, Tata Group, and Infosys—the study employs rigorous statistical methodologies, including independent T-tests, linear regression models, and volatility assessments.

Our findings indicate a statistically significant superior Return on Capital Employed (ROCE) for Acquisition-Led strategies (Mean ROCE: 33.8% vs. 11.3%, $p < 0.05$), which also demonstrate a higher revenue-to-investment multiplier (1.48x vs. 1.02x). However, this efficiency is counterbalanced by heightened earnings volatility (Standard Deviation: ~29% for inorganic growth). Conversely, Capex-Led strategies, while capital-intensive and subject to significant gestation lags, provide a more stable and predictable expansion path. The study concludes that while "Buying" growth offers immediate efficiency, "Building" growth remains essential for long-term industrial dominance.