In a record-setting move, SBI Mutual Fund has directly acquired a 3.6% stake in Asian Paints for ₹7,704 crore (approximately \$900 million) from Reliance Industries. This one-on-one block deal is likely the biggest ever completed solely between an Indian asset manager and a single seller. With this transaction, Reliance has effectively monetised a substantial portion of a long-standing investment with exceptional returns.

1. Reliance Capitalises on 17-Year Investment
Reliance sold 3.5 crore shares of Asian Paints, held through Siddhant Commercials Ltd, at ₹2,201 per share, while the stock closed at ₹2,218.05 on the day of the deal. The sale marks the realisation of nearly 23x returns on its original investment, including dividends. Despite the stake sale, Reliance will retain 87 lakh shares in Asian Paints.

2. Past Attempts and Pricing Challenges
Back in May, Reliance restarted its divestment efforts, with Bank of America originally enlisted to oversee the transaction. Initial bids at 6-7% below market value led Reliance to delay the process. However, this week’s successful block deal indicates renewed confidence and favourable conditions for executing such a significant transaction.

3. Reliance’s Prior Market Activity
Insiders revealed that Reliance had been gradually offloading Asian Paints shares in recent weeks using various brokers. Yet, it had refrained from executing a large, singular deal until now. This transaction follows years of strategic consideration—Reliance had explored selling its Asian Paints stake five years ago while preparing India’s biggest rights issue, but instead raised \$25 billion from global investors to support its telecom and retail ventures.

4. Asian Paints’ Struggles in a Shifting Market
Once a Nifty blue-chip favourite, Asian Paints has faced declining fortunes. Over the past three years, its share price has dropped by 17%, and FY25 turned out to be one of its weakest years in recent memory. The company’s decorative segment, which constitutes 87% of its revenue, declined 5% YoY, with volume growth of just 2.5%—the slowest in over 20 years.

5. Competitive Pressures Shake Market Position
Asian Paints’ dominance has been under siege. According to Elara Securities, its market share slipped from 59% to 52% in FY25. New entrants like Aditya Birla’s Opus Paints and aggressive plays by JSW Paints and Grasim have intensified the competitive landscape. JSW is reportedly close to acquiring the Dulux brand from Akzo Nobel, which could further disrupt market dynamics.

6. Financial Institutions Still Bullish
Despite the headwinds, domestic institutional investors continue to back Asian Paints. LIC holds the largest chunk at 8.29%, while SBI Mutual Fund and ICICI Prudential own 1.51% and 1.24%, respectively. Combined, local financial institutions control over 5.6% of the company’s equity.

7. Company Scale and Global Reach
Asian Paints remains a major player despite its recent slump. Holding a 44% market share in India’s decorative paints segment, the company ranks as the second-largest in Asia and eighth globally. Its domestic production capacity stands at 1.85 million kilolitres, serving customers in over 60 countries. Its robust network includes more than 74,000 dealers and over 50,000 shade-mixing machines.