What Asian Paints' Stocks Decline Teaches About Large Cap Risks

With a market capitalisation of INR 2,26,800 crores as of 22 July 2025, Asian Paints stocks are the largest in the paint industry¹. With over 75 years of experience, this blue-chip company has delivered a 26% return on equity and 11% stock price CAGR in 10 years². Moreover, a strong uptrend, characterised by several peaks, was noted from 2020 to early 2021.

However, Reliance has offloaded 3.5 crore shares from its 17-year-long-held stake in Asian Paints at INR 7,703.5 Crores, through a block deal on Thursday, 10 July 2025³.

Asian Paints Stock in the last 5 years

This deal occurred amidst a decline in Asian Paints' stock market performance.

What Is Happening With Asian Paints?

In the past three years, the Asian Paints stocks have witnessed a fall of 17%, which is one of the most prominent Nifty blue-chip stock declines. While there are various reasons for this, let us first take a closer look at the trend before analysing the causes.

1. Current Scenario 

Asian Paints, one of the most prominent large-cap stocks in India, has been under decline over the past 3 years⁴. The last high recorded was INR 3,395 in September 2024⁵. After which, the stock plunged around 33.5% in just 3 months as of January 2025. During this slide, Asian Paints stocks fell below the INR 2,500 mark on 12 November 2024, its lowest for the first time in three and a half years⁶.

Moreover, after reports on liquidation of Asian Paints stocks by the Reliance Group emerged, the stock dipped about 2% on Wednesday, 14 May 2025⁷. The chart below shows the Asian Paints stock market performance.

Asian Paints Stocks: One-Year Performance

On 22 July 2025 (the time of writing this article), the intraday high was INR 2380.80, whereas the 52-week high, recorded on 16 September 2024, is INR 3,394.90. Therefore, the current high is approximately 29.87% lower than the highest recorded in the past year.

Subsequently, the intraday low on 22 July 2025 is INR 2361.30 and the 52-week low, recorded on 5 March 2025, is INR 2,124.75. This means that today’s low is approximately 10.01% more than the highest low recorded in the last year. Moreover, the 52-week low was recorded just 4 months ago.

However, understanding what contributed to the poor performance of Asian Paints stocks is crucial to gauge the future course of action.

2. Reasons Behind This Decline

The answer to should you invest in Asian Paints can only be answered through the causes of its downtrend. Without exploring them, it is difficult to judge the longevity of this market sentiment. Therefore, some of the key contributors are discussed below.

• Competition: While there are various legacy brands in the paint industry, there are many new entrants as well. For instance, the Birla Opus Paints was launched on 22 February 2024⁸. Moreover, the market share of Asian Paints has reduced from 59% to 52% in FY25⁹.
• Legal Tussle: On 6 June 2025, reports emerged of a complaint filed against Asian Paints by Birla Opus to the Competition Commission of India, claiming an abuse of industry dominance¹⁰. Post this development, the stock dipped 1.8% on a Wednesday session¹¹. 
• Global trends: The production cost of paint has also been steep. For instance, the prices of Titanium Dioxide, a major raw material, have been on the rise, with major brands like Longbai Group increasing international prices by USD 50/ton. Moreover, crude oil, which provides raw material to the paint industry, is also witnessing instability.
• Quarterly Report: The most crucial contributor to this blue-chip stock decline is its fourth quarter result. The net profit declined 45% year-on-year and highlighted major concerns¹². Some of them are listed in the table below.

Therefore, although large-cap stocks are widely considered as one of the safe investment options in India, Asian Paints stocks, like many others, prove that they are not devoid of risk. Therefore, to optimise investment portfolio, let us explore the relation between large-cap stocks and market risk.

The Illusion Of Safety In Large Caps

Often investors perceive large-cap stocks to be less risky than small or mid-cap. However, it is not completely true. Therefore, to tackle large-cap stock risks, investors must first identify the factors that cause this perceived notion of safety and perform impartial analysis of the same.

Why Investors Blindly Trust Large-Cap Stocks

Some reasons that cause blind trust in large-cap stocks are discussed below.

1. Their popular brand name causes strong brand recall and induces faith.
2. Since large-cap stocks often dominate significant market share, investors anticipate revenue and profit advantage.
3. Their scale poses an assumption that they would be able to sustain market volatility.
4. Usually, such companies have greater compliance, prompting investor faith in regulatory oversight.

However, not only Asian Paints, but several large-cap stocks have disclosed large-cap stock risks in the past.

Case Studies Of Other Blue-Chip Companies That Lost Shine 

The two most prominent cases of blue-chip stock decline are Yes Bank and Vodafone Idea. Yes Bank, which was once valued at INR 1 lakh crore in 2017-18, had to sell 49% of its stake to SBI at INR 10, amidst rising debts¹³. Moreover, Vodafone Idea has also reported sizable losses since Q2FY19 due to high debt, growing competition and regulatory pressures.

Therefore, portfolio diversification strategies are crucial amidst these historical records.

Risk Management 101: Diversification Is Key

It is important to remember that every investment medium is subject to risk. Therefore, over-reliance on any sector or stock might be detrimental. For instance, given the stress on crude oil prices, if a portfolio contains a disproportionate number of oil company stocks, it can be risky.

Therefore, stock market diversification across industries and alternative investments in India is important.

Why Modern Portfolios Must Include Them

Discussed below are some popular investment avenues that can aid in portfolio diversification.

1. Mutual funds Vs Direct Stocks: Mutual funds invest their pool across different stocks and sectors, promoting portfolio diversification through limited funds. Mutual funds in Grip can start with a minimum investment of INR 100, with a one-year annualised return of 10.11%.
2. Bonds: Investors can earn fixed returns and generate passive income through corporate bonds on Grip, with yields going up to 14%.
3. Fractional Real Estate: Often, real estate enjoys stable capital appreciation. However, real estate investment is capital intensive. However, through fractional ownership, investors can enjoy real estate appreciation through limited funds.
4. Other Alternative Investments: Other investment avenues like SDIs, AIFs, and SIFs can also help optimise returns while managing risk effectively.

Conclusion

The dwindling stock market performance of Asian Paints stocks is caused by various factors. However, it is a testament to large-cap stock risk, which is often considered a safe investment. Therefore, optimal portfolio diversification through mutual funds, bonds and other alternative mediums can aid in risk control.
Login to Grip Invest, to explore curated bond deals, alternative investments, and smarter ways to diversify your portfolio beyond traditional large-cap stocks.

References:

1. Screener, accessed from: https://www.screener.in/market/IN02/IN0202/IN020201/IN020201015/
2. Asian Paints, accessed from: https://www.asianpaints.com/about-us.html
3. LiveMint, accessed from: https://www.livemint.com/market/stock-market-news/reliance-industries-offloads-3-5-crore-shares-in-asian-paints-worth-over-rs-7-700-crore-11749724268298.html
4. The Economic Times, accessed from: https://economictimes.indiatimes.com/markets/stocks/news/forgotten-bluechip-asian-paints-shares-near-4-year-low-will-2025-be-a-comeback-year/articleshow/116584362.cms?from=mdr
5. Business Standard, accessed from: https://www.business-standard.com/markets/news/asian-paints-stock-down-33-in-3-months-is-the-worst-over-tech-view-here-125010300480_1.html
6. Business Today, accessed from: https://www.businesstoday.in/markets/company-stock/story/asian-paints-shares-fall-below-rs-2500-mark-for-first-time-since-april-2021-whats-next-453423-2024-11-12
7. LiveMint, accessed from: https://www.livemint.com/market/stock-market-news/asian-paints-share-price-falls-2-amid-reports-of-reliance-looking-to-sell-entire-4-9-stake-11747199821478.html
8. Money Control, accessed from: https://www.moneycontrol.com/news/business/earnings/grasim-stock-hits-fresh-high-after-birla-opus-launch-12332321.html
9. LiveMint, accessed from: https://www.livemint.com/market/stock-market-news/reliance-industries-offloads-3-5-crore-shares-in-asian-paints-worth-over-rs-7-700-crore-11749724268298.html
10.  CNBC TV 18, accessed from: https://www.cnbctv18.com/business/companies/asian-paints-faces-abuse-complaint-from-birla-opus-paints-formal-cci-probe-likely-soon-19616897.htm
11. The Economic Times, accessed from:  https://economictimes.indiatimes.com/markets/stocks/news/asian-paints-shares-in-focus-after-cci-orders-probe-over-alleged-abuse-of-dominant-position/articleshow/122194733.cms?from=mdr
12. Money Control, accessed from: https://www.moneycontrol.com/news/business/earnings/asian-paints-q4-results-net-profit-falls-45-on-year-to-rs-692-crore-rs-20-55-per-share-dividend-declared-13016960.html
13. The Print, accessed from: https://theprint.in/opinion/everything-you-need-to-know-about-the-yes-bank-collapse-rescue-and-prospects/377990/

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