Reliance just exited Asian Paints with a whopping ₹9,000 Cr profit after 17 years!
Reliance Industries recently made headlines by selling a major portion of its stake in Asian Paints. The deal, worth ₹1,876 crore, is part of a bigger strategy that seems to be rooted in capital efficiency, market timing, and changing business priorities.
This article explains the full picture behind this big move, its impact on Asian Paints, and what it could mean for the future.
What Happened
Reliance sold 85 lakh shares of Asian Paints on June 16, 2025, through a block deal. These shares were sold at an average price of ₹2,207 each, bringing in around ₹1,875.95 crore. This deal reduced Reliance’s stake in the company from about 0.88% to almost nothing. The buyer in this deal was ICICI Prudential Mutual Fund, which increased its ownership in Asian Paints from around 1.24% to 2.12%.
Just a few days before this, on June 12, Reliance had sold a much larger stake of 3.5 crore shares, or 3.64% of the company, to SBI Mutual Fund for ₹7,703 crore. After both transactions, Reliance now holds only around 2 lakh shares in Asian Paints, which is less than 0.2% and not considered significant.
How Much Did Reliance Gain
This exit marks the end of a very successful investment. Reliance had bought its stake in Asian Paints back in 2008, spending about ₹500 crore at the time. Over 17 years, the value of this stake grew more than 18 times.
From this single investment, Reliance earned nearly ₹9,080 crore in total. That’s a return of over 2,200% — a rare and highly profitable move, especially for a company whose core businesses are oil refining, petrochemicals, telecom, and retail.
This is a textbook example of a successful long-term investment and perfectly timed exit.
How Did the Market React
The stock market welcomed the news. Even after such a large share sale, Asian Paints’ stock price did not fall. It rose about 1.3% on the day of the second sale and kept its positive momentum in the following session.
This shows that the market had confidence in the company and was also encouraged by strong buying interest from large institutional investors like ICICI Prudential and SBI Mutual Funds. These funds taking up such large stakes show their trust in Asian Paints’ long-term potential.
However, there’s a more complex picture when looking at recent performance.
How Is Asian Paints Performing
Despite the strong investor interest, Asian Paints is currently facing several challenges.
1. Earnings Pressure
In the latest quarterly results (Q4 FY25), the company reported a 45% drop in net profit, which stood at ₹692 crore. Revenues also fell by about 4% to ₹8,359 crore. This is concerning, especially for a market leader.
2. Weak Demand
Asian Paints’ decorative paints segment has seen its weakest demand in nearly two decades. According to the company’s CEO, this slowdown is linked to sluggish home construction and renovation activity, particularly in urban markets.
3. Expensive Valuation
Even with the fall in profit, Asian Paints is trading at a very high price-to-earnings (P/E) ratio of nearly 60. This means the stock is expensive when compared to its earnings, which adds risk for new investors.
Why Did Reliance Sell Its Stake
There are several reasons behind Reliance’s decision to exit Asian Paints:
1. Capital Reallocation
Reliance is heavily investing in its core businesses, oil and gas, retail, telecom, and green energy. These sectors require constant cash flow for expansion. Selling a mature, high-return investment like Asian Paints allows the company to move money into areas where it needs funds the most.
2. Profit Booking at Peak
Asian Paints’ stock has performed very well over the years. Despite short-term challenges, it still commands a high market valuation. Reliance likely saw this as a good time to cash out and lock in gains before any further downturn in the paints sector.
3. Sector Uncertainty
The paint industry is becoming more competitive. New players like JSW Paints and Birla Opus have entered the market. Moreover, the Competition Commission of India is investigating Asian Paints for allegedly blocking competition from smaller players. This legal cloud may have played a role in Reliance’s exit decision.
What Does This Mean for Asian Paints
Even though Reliance has exited, large mutual funds now hold bigger stakes in the company. This could bring more stability to the stock, as these institutions usually invest for the long term.
However, the company still faces key challenges:
Slowing demand in the core decorative segment.
Margin pressure due to rising input costs.
Regulatory risk due to ongoing investigations.
Despite these issues, Asian Paints remains the market leader with over 50% share in the Indian decorative paints market. Its large distribution network and strong brand still give it an edge over competitors.
How Will This Impact Reliance
Reliance’s sale of its Asian Paints stake shows that the company is focusing more on strengthening its core businesses. This money could be used for:
Expanding its Jio platforms.
Funding its green energy initiatives, like solar and hydrogen.
Reducing debt or strengthening the balance sheet.
This move also signals that Reliance is not looking to be a long-term investor in unrelated businesses unless there is strategic alignment.
What Should Investors Watch Next
There are a few things to watch in the coming months:
Demand Recovery: If the construction and housing sectors pick up, paint demand will rise. This could benefit Asian Paints.
Regulatory Action: Any decision by the Competition Commission against Asian Paints may impact its business practices and stock price.
Mutual Fund Moves: If ICICI or SBI Mutual Funds increase their stake further, it could show even more confidence in the company.
Reliance’s Use of Funds: How Reliance reinvests this ₹9,000 crore gain will be important. Investments in green energy or Jio platforms could boost its future earnings.
Reliance’s ₹1,876 crore stake sale in Asian Paints marks the end of a very profitable investment journey that lasted 17 years. The company made a smart exit, pocketing strong returns at a time when the paint industry faces headwinds.
This move shows Reliance’s focus on core business areas and its skill in capital management. On the other side, Asian Paints now finds itself in a new phase, with increased institutional holding but also facing market and regulatory challenges.
For investors, the message is clear: even legacy investments are up for sale if they no longer fit into the bigger picture. And timing, as always, is everything.
