Reliance Sells This Paint Stock Through A Block Deal; Should Investors Buy, Hold Or Sell The Stock?

Asian Paints ended with a modest rise on Tuesday, June 17, after Reliance Industries Ltd. (RIL) continued its exit from the company, selling a significant portion of its remaining stake in a fresh block deal on Monday, June 16.

Asian Paints' stock reacted positively, and closed at Rs 2,264 up by 19.20 points or 0.86%. The stock opened at Rs 2231 and made its day's high of Rs 2281. The stock had also ended 1.28% higher on Monday following the deal confirmation.

Asian Paints Block Deal:

In the latest transaction, Reliance Industries, led by Mukesh Ambani, sold the shares at Rs 2,207 apiece through its subsidiary Siddhant Commercials Private Limited, valuing the deal at around Rs 1,876 crore, according to NSE block deal data. The sole buyer in this trade was ICICI Prudential Mutual Fund, which increased its stake in Asian Paints from 1.24% to 2.12%.

This comes just days after Reliance offloaded 3.5 crore shares, or 3.64% of Asian Paints, for about Rs 7,703 crore, also through Siddhant Commercials. That stake was acquired by SBI Mutual Fund at Rs 2,201 per share. Following that earlier deal, Reliance had 8.7 million shares remaining, and now holds just 2 lakh shares in the paint major.

As of the fourth quarter of FY25, the shareholding structure of Asian Paints comprised 52.6% held by promoters, 12.2% by foreign institutional investors (FIIs), 15.6% by domestic institutional investors (DIIs), and the remaining 19.5% held by the public.

Market Performance & Outlook:

Despite a short-term bounce, Asian Paints has experienced a volatile year in the stock market. The stock is down 22.42% over the past 12 months and has declined 1.71% year-to-date. However, over a longer horizon, it has delivered strong returns, gaining almost 42% in the last five years.

The stock hit a 52-week high of Rs 3,394 on September 16, 2024, and a 52-week low of Rs 2,125 on March 4, 2025. As of June 17, its market capitalisation stood at over Rs 2.17 lakh crore.

"The next two years are likely to see intense competition in the market, which could eventually lead to higher prices. Things may stabilize after that. If the Israel-Iran conflict causes crude oil prices to rise further, the cost of raw materials could go up, forcing the company to raise paint prices. However, this would only happen if the situation worsens significantly.

Reliance Industries had held the stock for a long time, and their decision to sell may reflect concerns about the company's challenging phase and increasing competition. I recommend selling the stock for now and considering a re-entry after 1-2 years," said Amit Agarwal, Senior Vice President of Kotak Securities.

"While long-term prospects for the company remain strong, driven by budget-led income growth, falling raw material costs, backward integration plans, capacity expansion, and innovative product launches, near-term performance may stay muted due to weak demand and rising competition. As a result, FY26/27 estimates have been revised down, and the rating is maintained at hold with target price of Rs 2,120, according to Axis Securities report.

Financial Report

Asian Paints reported a 45% YoY drop in net profit for the March 2025 quarter at Rs 692 crore, missing analyst expectations. Revenue fell 4.3% to Rs 8,359 crore, reflecting the broader industry slowdown.

"Current demand conditions are the weakest in 20 years, with negative growth in decorative paints seen for the first time in two decades, worsened by intensifying competition," said Amit Syngle, CEO of Asian Paints, after the Q4FY25 results raised concerns over the numbers.

"While the exit of a major investor like Reliance signals a shift in institutional sentiment, Asian Paints remains under pressure from weak demand and rising competition. The recent rally may offer short-term relief, but long-term investors should watch earnings recovery and sector trends closely," says Amit Agarwal of Kotak Securities."