Asian Paints Share Price Falls as Company Books ₹90 Crore Loss on Indonesia Business Exit

India’s biggest paints manufacturer, Asian Paints, has announced its exit from the Indonesian market, resulting in a potential loss of ₹90 crore. The company has agreed to sell its entire stake in PT Asian Paints Indonesia (PTAPI) and PT Asian Paints Color Indonesia (PTAPCI) to Berger Paints Singapore Pte Limited for SGD 7.5 million (approximately ₹48 crore). The final deal value is subject to certain conditions being met.

Strategic Decision Behind the Exit

Asian Paints entered Indonesia in FY 2016-17, but its presence remained limited. The decision to divest aligns with its broader strategy to focus on markets with higher growth potential. Following the completion of this deal, Asian Paints will no longer operate in Indonesia, and PTAPI and PTAPCI will cease to be its subsidiaries. The company clarified that this move is not expected to have a major impact on its overall international operations.

Market Reaction: Asian Paints Share Price Declines

The divestment news negatively impacted Asian Paints’ share price, which dropped 1.5% to a low of ₹2203.10. The stock is already facing selling pressure due to growing competition in the paints sector. It is currently trading near its 52-week low of ₹2186.35, having tumbled 54% from its peak of ₹3394.00. As of February 14, 2025, at 3:54 PM, the stock was trading at ₹2,231.30, down 0.23%.

Financial Performance and Challenges

Asian Paints has been struggling with weak financial performance over recent quarters. In Q3 FY24-25, the company reported declining revenue and profits, impacted by subdued urban demand and a weak festive season. Its EBITDA margins contracted by 344 basis points to 19.1% due to an unfavourable product mix and operational challenges. Over the past year, Asian Paints share price has lost 25%, with a 27% decline over the past 6 months.

Future Outlook

Management remains cautious about demand recovery, particularly in urban markets, though rural demand shows some resilience. A favourable monsoon is expected to boost rural consumption in Q4 FY25 and Q1 FY26. For FY25, the company has projected single-digit volume growth and expects margins to stabilise between 18-20%, supported by moderating raw material costs.

Conclusion

Asian Paints’ exit from Indonesia, though financially impactful, aligns with its strategic focus on core markets. However, with increasing competition and margin pressures, the company’s stock price outlook remains uncertain. Investors will closely monitor how Asian Paints navigates these challenges while seeking future growth opportunities.

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