Reliance Industries (RIL) announced Monday that it sold the remaining 87 lakh equity shares of Asian Paints at an average price of Rs 2,207.65 per share to ICICI Prudential Life Mutual Fund in a block deal worth Rs 1,876 crore. This follows last week’s disposal of 3.50 crore shares to SBI Mutual Fund for Rs 7,704 crore at Rs 2,201 per share, completing RIL’s exit from the paint giant.
The timing couldn’t be more strategic. RIL has offloaded its entire 4.9% stake held through subsidiary Siddhant Commercials just as Asian Paints faces its toughest competitive challenge in decades, with shares down over 30% in the past two years, making it one of the worst-performing bluechip stocks in that period.
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Strategic Exit Amid Headwinds
Ambani’s exit comes as Asian Paints’ once-impregnable fortress crumbles under siege from new entrants, notably Birla Opus Paints backed by the Aditya Birla Group. According to Elara Securities, Asian Paints’ market share has plummeted from 59% to 52% in FY25.
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The paint maker has posted muted revenue growth for four straight quarters, citing sluggish urban demand and an early Diwali. More concerning is the margin pressure — despite lower raw material costs, higher rebates and increased competition have shrunk gross margins year-on-year.
Investor Confidence in RIL’s Strategy
Investors are viewing this monetization positively as part of RIL’s broader strategic repositioning. Morgan Stanley’s Mayank Maheshwari noted: “RIL is in its 4th monetisation cycle as its investments in new energy and eventually AI infrastructure start to fructify in F26. By end-2027, we see monetisation of the petrochemical investments as well.”
The brokerage expects RIL’s re-rating to gain traction as confidence in ROCE improvement beyond 9% rises, with the company’s annual average capex spend of approximately $15 billion over the next three years comfortably supported by its cash flows.
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Perfect Market Timing
RIL’s original investment demonstrates Ambani’s contrarian investing prowess. Back in January 2008, when markets were in a tailspin amid the global financial crisis and Lehman Brothers’ collapse, RIL picked up the 4.9% stake for just Rs 500 crore through its subsidiary — a move that now appears prescient.
Reliance had explored divesting this stake five years ago ahead of launching India’s largest rights issue while deleveraging its balance sheet following a mega capex plan in telecom. However, it held onto the investment and instead raised a combined $25 billion for its digital, telecom, and retail ventures through marquee global strategic and financial investors.
Despite the challenges, Asian Paints maintains significant market presence and operates with an annual domestic decorative paint capacity of 1.85 million kilo litres, serving consumers in over 60 countries through the country’s largest distribution network of 74,129 dealers.
However, brokerages have turned cautious. Nuvama recently cut its FY26-FY27 earnings estimates by 6-8%, forecasting a modest 7.2% EPS CAGR through FY28. The brokerage slashed its target price to Rs 2,200 with a neutral rating, assigning a valuation of 45x forward earnings — a notable 20% discount to the stock’s 10-year average.
The paint industry is also facing potential antitrust scrutiny, adding another layer of uncertainty for investors.
As Ambani books one of corporate India’s most remarkable investment returns, the exit marks the end of an era while positioning RIL for its next phase of growth in new energy and digital infrastructure.
