India’s largest asset managers have acquired a 3.6% stake in India’s largest paint company worth $900 million from Reliance Industries Ltd making it one of the largest bilateral block deals.
With market capitalisation of Rs 2,10,832, the share price of Asian Paints was trading 1% down to Rs 2,196 from its previous closing price of Rs 2,219.4 largely because of the rise in the price of Brent crude which is the key raw material in the paint industry.
The buyer, SBI Mutual Fund, increased its stake from 1.51% to 5.15% in Asian paints following a bilateral trade from Reliance’s arm Siddhant Commercial and it currently holds a 1.26 % stake following the deal. SBI MF putting nearly Rs 7700 Crores ($900 million) into a company like Asian Paints demonstrates that domestic capital is willing and able to fund high-quality assets.
Asian Paints is the largest home decor company in India. The 80+yr old company has major brands like Asian Paints, Apco, etc under its umbrella.The company offers interior and exterior wall finishes, waterproofing, wood finishes, enamels, adhesives, and more. It also includes a home decor business that offers modular kitchens and wardrobes, bath fittings and sanitaryware, and decorative lighting.
Crude Oil Spike: What It Means for Asian Paints
Asian Paints, being one of India’s largest paint manufacturers, is directly exposed to this risk. As the crude oil is the base for many chemical derivatives used in paint production this will increase the cost of raw materials and reduce the gross margin for the company. So it will be bearish for the Asian paints in the short term, primarily due to margin compression and investor concerns over rising input cost. But Asian paints has strong pricing power and a premium brand position, if it manages to stabilise margin and maintain the volume it will recover and outperform.
Financial Highlights
The company reported a revenue of Rs 33,906 crore in FY25, down by 4.47 percent from its FY24 revenue of Rs 35,495 crore. Coming to its profitability, the company reported a net profit decline of 33.24 percent to Rs 3,710 crore in FY25 from Rs 5,558 crore in FY24. The stock delivered an ROE and ROCE of 20.59 percent and 25.72 percent and is currently trading at a P/E of 54.84x as compared to its industry average of 40.21x.
Written by: Rohan Pandey
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