Asian Paints share price falls 2% amid reports of Reliance looking to sell entire 4.9% stake

Asian Paints share price: Shares of leading paints manufacturer Asian Paints dipped nearly 2% in Wednesday's (May 14) trading session amid reports that the Reliance group is looking to sell its entire 4.9% stake in the company.

According to a report in The Economic Times, Reliance Industries has revived its plan to sell its 4.9% stake in Asian Paints. For this purpose, it has roped in Bank of America (BofA) to manage the transaction.

This is not the first time that Reliance has considered cashing in on its investment in Asian Paints. Back in 2020, too, it had entered into discussions with banks for a potential sale of its 4.9% stake in Asian Paints.

According to yesterday's closing price of ₹2,325.10, Reliance's stake in Asian Paints is worth ₹10,925 crore. Reliance had acquired this stake in 2008 for nearly ₹500 crore, at a time when the company stock was a market darling.

Asian Paints stock under pressure

However, off-late, Asian Paints stock has seen significant selling pressure amid growing competition in the paints segment, which could dethrone the company from its top spot. In the last one year alone, Asian Paints stock is down 20%, while it has declined 33% from its 52-week high of ₹3,394.

Asian Paints has lost more market share than analysts expected to rival Grasim Industries in the year since billionaire Kumar Mangalam Birla's ambitious paints venture was launched, according to Elara Securities data shared exclusively with Reuters.

Asian Paints' market share fell to 52% from 59% in the 12 months ending March 31, Elara Securities data shows, raising the pressure on the industry leader to spend more on marketing and discounts to retain its crown. Birla Opus' market share reached 6.8% in the latest quarter.

Asian Paints, in its Q4 call, highlighted rising competition, with new players likely causing a loss in market share.

“While the company remains focused on its strong brand and value offerings, we believe these efforts may not be enough, as Asian Paints' focus remains on ensuring the right balance between margins and market share. Market share is expected to come under further pressure unless the competition eases meaningfully,” said Elara Securities following the paintmakers' Q4 results last week.

Given the lack of positive triggers as regards recovery in demand and continued competitive intensity, the brokerage remained cautious on the stock, reiterating its ‘Sell’ rating with a lower target price of ₹1,940 (from ₹2,030).

Asian Paints Q4 results

Asian Paints reported a 45% year-on-year (YoY) decline in consolidated net profit for Q4FY25 at ₹692.13 crore, compared to ₹1,256.72 crore in Q4FY24. Revenue fell 4.3% YoY to ₹8,358.91 crore from ₹8,730.76 crore.

PBDIT dropped 15% to ₹1,436 crore while PBDIT margin narrowed to 17.2%, down from 19.4% YoY.

Asian Paints share price touched the day's low of ₹2280.50 on the BSE, and was trading 1.3% lower at ₹2294.65 around 11.20 am.

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