Reliance Industries Ltd (RIL) has revived its plan to sell its 4.9% stake (about Rs 11,141 crore or $1.31 billion) in Asian Paints. The move comes at a time when margin pressure and competition in the paints industry is increasing. Reliance has tasked Bank of America (BoFA) to handle the deal. The shares will be sold through a block deal, but buyers are seeking a 6-7% discount to market value.
Reliance bought the stake in 2008 for Rs 500 crore. Including dividends, the investment has now grown 24 times to Rs 11,141 crore.
Why does Reliance want to sell the stake?
According to ET, the stake in Asian Paints is a “non-core” investment for Reliance. The paints market ($9 billion) has seen competition from new players such as Grasim’s Birla Opus (3-4% market share) and Akzo Nobel’s sale. Asian Paints market share has declined to 52% from 59% in FY25.
Challenges for Asian Paints: Weak revenue growth over the last 4 quarters. Weak demand in urban markets, and 6% lower growth than peers (Berger, Kansai Nerolac). Grasim’s entry has increased cashbacks and discounts offered to dealers, impacting margins.
Asian Paints has the largest distribution network in the country (74,129 dealers). CEO Amit Singal has said that they will take “cautious steps” to deal with the competition. Asian Paints is ranked second in Asia and eighth globally with a 44% share of the domestic decorative paints market.
