Reliance to Divest 4.9% Stake in Asian Paints as Competition Heats Up

Amid heightened competition in India’s paint market, Reliance Industries is reportedly planning to exit its investment in market leader Asian Paints. This comes after Asian Paints reported a 45% decline in consolidated net profit to Rs 700.83 crore for the March quarter, driven by muted demand and increased competitive intensity.

According to a report by The Economic Times (ET), Reliance has appointed Bank of America (BoFA) to manage the sale of its 4.9% stake in Asian Paints, likely through one or more block deals. Reliance had acquired the stake for Rs 500 crore in January 2008, just before the global financial crisis.

At Tuesday’s closing price of Rs 2,323, the stake is valued at Rs 11,141 crore ($1.31 billion), significantly below Asian Paints’ 52-week high of Rs 3,394 hit in September last year. Despite the recent decline of nearly 20% in the stock over the past year, Reliance stands to make a 24-fold return on its investment, including dividends, ET reported.

Initial offers for the stake have come in at a 6–7% discount to the current market price. Over the past 24 hours, several other investment banks and brokers have reportedly joined the race to secure buyers. However, the company may shelve the plan if bids do not meet its pricing expectations, the ET report noted.

Reliance had reportedly considered a similar sale five years ago, ahead of its record rights issue and during a major deleveraging phase following heavy telecom-led capex.

That plan was ultimately shelved, with the company instead raising $25 billion for its digital, telecom, and retail businesses from global investors including Facebook, Google, KKR, General Atlantic, and the Abu Dhabi Investment Authority—valuing Jio and Reliance Retail at over $100 billion by 2024.

Since 2020, Reliance has channelled about $50 billion into its retail and digital services, with an additional $9 billion earmarked for its green energy push, including solar modules, hydrogen electrolysers, and energy storage systems.

Asian Paints’ Eroding Leadership

Since the entry of Birla Opus into the paint business, Asian Paints has faced rising competition in urban markets. According to Elara Securities citied by the ET, its market share has fallen from 59% to 52% in FY25. Their research note added that Grasim (Aditya Birla Group) has been gaining market share in the west and south, while employee attrition has also been a concern.

Paint companies have posted muted revenue growth for the fourth straight quarter, citing weak urban demand and an early Diwali. Despite lower raw material costs, rising competition has led to increased discounting, squeezing margins.

Asian Paints is currently trailing rivals Berger and Kansai Nerolac by six percentage points in revenue growth for FY25 so far. The potential sale of Akzo Nobel’s decorative business in India and Sri Lanka to players like Indigo Paints or JSW Paints could further intensify the competitive landscape, especially in metro markets.

With a 44% share in the decorative paint segment, Asian Paints remains the second-largest paint company in Asia and the eighth-largest globally. The company plans to take a more sustainable approach to defend its market leadership, CEO Amit Syngle told analysts during the recent conference call.