The Growth Dilemma: Organic Growth vs Inorganic Growth | Quick ₹eads

by Karnivesh | 05 January, 2026

The Race That Never Ends

A startup founder on stage says: "We're growing 50% organically!"

An investor in the audience thinks: "Great. But is that sustainable without acquisitions?"

A decade later, that same founder is now an M&A executive buying 10 companies a year. The 50% organic growth dream has become a 5% reality. Now growth only comes from buying competitors.

This is the journey every successful company faces: the shift from organic to inorganic growth.

Understanding this shift and knowing when each type of growth makes sense separates investor winners from losers. Because organic and inorganic growth are not just different speeds. They have different economics, different risks, and different impacts on shareholder value.

The Two Paths to Growth

Organic Growth = Revenue growth from existing operations (selling more to existing customers, launching new products, entering new markets with your own resources).​

Inorganic Growth = Revenue growth from acquisitions and mergers (buying another company and adding its revenue to yours).​

Both grow revenue. But they destroy or create value very differently.

Reliance Industries is investing $13 billion in acquisitions while growing organically through Jio (telecom) and Reliance Retail. Total growth is around 11.2%, split between 7.8% organic and 3.4% from M&A.​

TCS, by contrast, grows almost entirely organically. In recent years, acquisitions like Coastal Cloud ($700 million) and CMC Limited are exceptions, not the rule. TCS's 6.5% growth is 5.8% organic, with only 0.7% from M&A.​

Bharti Airtel sits in the middle: 9.3% total growth, 7.5% organic, 1.8% from spectrum acquisitions and strategic M&A.​

The Growth Mix: How Indian Giants Balance Organic Expansion with Strategic Acquisitions 

Three Indian giants. Three completely different growth strategies. All are winning. But the question is: Which growth is more valuable to shareholders?

The Organic Story: Slow but Real

Organic growth is the unsexy path. It requires building products, hiring talent, investing in infrastructure, and hoping customers love what you build.

TCS is the master of organic growth. In FY25, the company grew revenue 5.8% organically while maintaining 25%+ operating margins. Every rupee of growth came from existing employees delivering better service to existing clients, acquiring new clients, or getting clients to buy more services.​

The beauty? Pure organic growth is profitable growth. You don't need to integrate new companies, lay off redundant employees, or write off failed acquisitions. You just grow.

The catch? Organic growth is slow. When TCS wanted to expand into Salesforce consulting, it couldn't wait 10 years to build expertise organically. So it acquired Coastal Cloud (a Salesforce specialist) for $700 million. Why? Speed. It wanted market access in months, not years.​

Here's the consultant's insight: Organic growth is durable. It compounds. But it's only as fast as your organization can execute. Once execution maxes out, growth stalls.

TCS has hit this ceiling. In mature markets like the UK and consumer businesses, the company struggles to grow fast enough. Management is now pursuing more aggressive M&A acquisitions of specialized firms like Coastal Cloud to fill capability gaps.​

The Acquisition Play: Fast, But Risky

Now look at Reliance Industries, which is in full acquisition mode.

Over the past 5 years, Reliance has invested $6-7 billion in acquisitions (some sources say $13 billion). Major deals include:​

• Star India from Disney ($3.1 billion) for media dominance​

• REC Solar Holdings ($771 million) for renewable energy​

• Retail acquisitions (SIL, Velvet, Tags brands) to scale Reliance Retail​

• Karkinos Healthcare ($43.9 million) for healthcare services​

These acquisitions are adding 3.4% to Reliance's total growth. Without them, Reliance would grow at 7.8%. With them, it's 11.2%.​

But here's the trap: Acquisitions look great in year 1. They destroy value over time if not integrated properly.

When Reliance bought Star India, it gained Disney's movie library and streaming content instantly. That's inorganic growth—large revenue injection without building anything. But integrating Star (a media company with Hollywood mindset) into Reliance (a conglomerate with engineering mindset) is proving difficult. The streamer is still burning cash.​

A consultant's warning: Inorganic growth is fast revenue, not fast profit. You buy a company for ₹1,000 Crore revenue, pay a 30% premium ($300 Crore), integrate it, and hope synergies offset the premium. Often they don't.

The Spectrum Bet: When Inorganic Growth Is Necessary

Bharti Airtel shows a unique case: inorganic growth not for revenue, but for survival.

Airtel spent ₹6,857 Crore ($825 million) on spectrum in 2024 and 400 MHz more in 2025 from Adani. Why? Because 5G dominance requires spectrum. You can't build spectrum organically—you must bid in government auctions.​

This isn't M&A in the traditional sense. But it's inorganic capex that immediately enables new revenue streams (5G customers, enterprise solutions).​

The result? Airtel's 5G subscriber base grew to 120 million by end-FY25. This growth is half-inorganic (funded by spectrum acquisition) and half-organic (subscribers signing up for 5G services).​

The lesson? Sometimes inorganic growth is not optional. It's mandatory. In telecom, you must acquire spectrum or die. In retail, you must acquire brands to compete. The choice isn't "organic or inorganic." It's "acquire at fair prices or get left behind."

The Math: When Does Inorganic Growth Create Value?

Here's the critical question: Does an acquisition create value or destroy it?

Value Creation Formula:

• Acquisition Price: ₹1,000 Crore

• Acquired Company's Profit: ₹100 Crore

• Profit Multiple Paid: 10x

• Expected Synergies: ₹30 Crore annually

If synergies materialize, the acquisition paid for itself in ~3 years. Value created.

If synergies don't materialize? The buyer overpaid and destroyed shareholder value.​

TCS's acquisition of Coastal Cloud ($700 million) reflects this calculation. Coastal Cloud generated roughly $140 million in revenue (~6.5 EBITDA margin, typical for advisory). TCS is paying 5x revenue (10x EBITDA) because it expects massive synergies:​

• Cross-sell Salesforce services to TCS's 50,000+ enterprise clients​

• Leverage TCS's global delivery scale to expand Coastal Cloud worldwide​

• Integrate AI/data capabilities to differentiate the offering​

If TCS achieves even 50% of these synergies, it's a great deal. If none materialize? Overpaid by $500 million.​

Reliance's Star India acquisition is the opposite case. Reliance paid $3.1 billion for Star India's content library and streaming business. But the streaming business is burning cash. Reliance is leveraging Jio's distribution, but integration challenges persist. Unclear if synergies will justify the premium.​

The Growth Quality Scorecard

When evaluating a company's growth, ask:

1. How much is organic vs inorganic? Organic is real, durable, profitable. Inorganic is fast but uncertain.

2. Are acquisitions strategic or desperate? Strategic acquisitions fill gaps (TCS buying Salesforce expertise). Desperate acquisitions chase revenue (overpaying for competitors).​

3. Are synergies materializing? 18-24 months post-acquisition, check if cost synergies, revenue synergies, or both are real.​

4. At what price were acquisitions made? TCS paid 5x revenue (expensive). Some companies pay 3x (cheap). Price signals quality.​

5. Is the company growing too fast through M&A? If >50% of growth is inorganic, watch out. It's either addicted to acquisitions or struggling with organic execution.​

The Final Truth

Reliance Industries is betting that growth-at-any-price (through acquisitions) will work. It's investing $13 billion in M&A across new energy, retail, and media. If it executes flawlessly, it doubles in size. If integration fails, it destroys billions in shareholder value.​

TCS is betting that disciplined organic growth, supplemented by selective M&A, is safer. Organic growth is slow but profitable. Acquisitions are used only to fill critical gaps (Salesforce expertise, AI capabilities).​

Bharti Airtel is betting that inorganic spectrum acquisition enables organic subscriber growth. Spend on spectrum today, harvest customers tomorrow.​

All three strategies can work. But they have very different risk-reward profiles. The investor who understands these differences—and can identify when inorganic growth is creating or destroying value will outperform those who just chase growth numbers.

Because not all growth is created equal.