Asian Paints in Spotlight: LIC Boosts Stake While Raamdeo Agrawal Bets on Bruised Bluechip Revival

Asian Paints’ stock is drawing attention after Life Insurance Corporation of India (LIC) increased its stake in the company. LIC revealed it now owns 7% of Asian Paints, up from 5%, through open market purchases at an average price of ₹2,891.25 per share this year.

In a filing, LIC stated that its shareholding rose from 4.79 crore shares to 6.72 crore shares, marking a 2.009% increase between January 1 and December 9, 2024. LIC noted that this move aligns with its regular investment strategy.

Asian Paints: Market Leader Facing Challenges

Asian Paints, valued at around ₹2.30 lakh crore, is a leader in the paints and coatings industry. LIC’s increased stake comes as the company faces challenges like slower urban demand, growing competition, and rising raw material costs.

Raamdeo Agrawal Sees Opportunity

Renowned investor Raamdeo Agrawal has identified Asian Paints as his next target under the “bruised blue chips” strategy—investing in strong companies during tough times.

“There’s no other blue chip as bruised as Asian Paints,” he remarked, referring to the stock’s nearly 30% decline this year due to slower consumption growth in India. Agrawal admitted he missed out on investing in Asian Paints multiple times over the decades but feels this is his moment to capitalize.

Weak Financial Performance in Q2FY25

Asian Paints reported disappointing financial results for the second quarter of FY25:

• Net Profit: ₹694.64 crore, down 42.4% YoY.
• Revenue: ₹8,003.02 crore, down 5.3% YoY.

Amit Syngle, the company’s MD and CEO, attributed the weak performance to low consumer demand and weather disruptions like extended rains and floods. The Domestic Decorative coatings segment saw slight volume declines, with domestic revenue falling 5.5% for the quarter.

Share Price Struggles

Asian Paints’ stock has been under pressure throughout 2024:

• Down 13% in the past month.
• Down 27% in the past three months.
• Down 29% year-to-date, in contrast to a 12% gain by the Sensex.

On Tuesday, the stock closed slightly higher, ending at ₹2,389.80 per share on the BSE.

Outlook

With LIC increasing its stake and Raamdeo Agrawal betting on its recovery, Asian Paints remains a stock to watch as it navigates a challenging period.