Reliance’s Surprise Exit—Why It Sold 35 Million Asian Paints Shares

Image Source: Outlook Business

Reliance Industries offloaded 35 million shares of Asian Paints from its group company Siddhant Commercials Limited, making a significant exit from its long-standing holding in the firm. The shares were offloaded at ₹2,201 per share, raising eyebrows over Reliance's overall investment strategy as competition in the paint sector increases.

Key Highlights:

- Sale Details of Stake: Reliance Industries sold its 4.9% stake in Asian Paints, which can fetch around ₹7,700 crore, depending on the sale price.
- Market Reaction: Asian Paints shares declined 2% following the news of Reliance's withdrawal, reflecting investors' concerns over heightened competition in the sector.
- Competitive Environment: The paints industry is experiencing heightened competition, with other players like Grasim Industries aggressively competing to increase their market share.
- Reliance's Investment Background: Reliance initially purchased its holding in 2008 for ₹500 crore, and thus this sale is a humongous return on investment in 17 years.
- Future Strategy: Reliance has not revealed its future strategy, but analysts think the company will reinvest the money into its digital, retail, or new energy businesses.

This transaction is a strategic decision on the part of Reliance to depart from legacy assets and shift its focus to high-growth sectors.

Sources: Economic Times, Live Mint