A possible loss of ₹90 crore could result from Asian Paints' announcement to sell off its business in Indonesia. Its subsidiaries will be sold to Berger Paints Singapore as part of the SGD 7.5 million deal, which would end its involvement in the Indonesian market.
Asian Paints, the largest paint maker in India, notified stock exchanges on Friday, February 14 that it was selling its operations in Indonesia, causing its consolidated financials to show a loss of around ₹90 crore.Details of the Deal
The blue-chip company announced in an exchange filing today that it has reached an agreement to sell its whole 100% stake in PTAPI and PTAPCI to its wholly-owned subsidiary Asian Paints International Private Limited (APIPL), PT Asian Paints Indonesia (PTAPI), and PT Asian Paints Color Indonesia (PTAPCI).
Through its two subsidiaries, PT Asian Paints Indonesia and PT Asian Paints Color Indonesia, APIPL has been conducting business in Indonesia since FY 2016–17.
According to Asian Paints' exchange filing, the deal is worth SGD 7.5 million, or around ₹48 crore, and the ultimate sum would be changed once certain requirements are met.
PTAPI and PTAPCI will no longer be APIPL subsidiaries after the purchase closes, and as a result, they will no longer be the company's subsidiaries. Asian Paints will also stop operating in Indonesia as a result of this. It added that neither company is significant to Asian Paints' total global operations and has a small presence in the nation.
According to Asian Paints, the company's consolidated financials would show a loss of about ₹90 crores from the sale of its Indonesian operations, subject to any necessary adjustments at close.
Impact on Stock Prices
Following the news of the divestment, Asian Paints shares, which are already under a lot of selling pressure due to the increasing competition in the paints sector, fell 1.5% to the day's low of ₹2203.10. The stock is currently trading near ₹2,186.35, which was its 52-week low. Meanwhile, the stock has fallen 54% from its 52-week peak of ₹3,394.00.
The share price of Asian Paints has dropped 27% in the previous six months and 25% in the last year.
Due to a dismal festive season and muted urban demand, the corporation saw a drop in revenue and earnings during the third quarter of the fiscal year 2024–45. Due to an unfavorable product mix and operational deleverage, EBITDA margins shrank 344 basis points to 19.1%, indicating margin pressure.
Given the continuous pressure in urban markets, management continues to take a cautious approach to demand recovery over the upcoming quarters. Demand in rural areas is still comparatively better. In Q4FY25 and Q1FY26, a favorable monsoon is anticipated to significantly increase rural consumption. For FY25, the company has projected single-digit volume growth.
It has been advised that, with the help of moderate raw material costs, margins will stabilize in the 18–20% area.
According to Asian Paints' exchange filing, the deal is worth SGD 7.5 million, or around ₹48 crore, and the ultimate sum would be changed once certain requirements are met.
PTAPI and PTAPCI will no longer be APIPL subsidiaries after the purchase closes, and as a result, they will no longer be the company's subsidiaries. Asian Paints will also stop operating in Indonesia as a result of this. It added that neither company is significant to Asian Paints' total global operations and has a small presence in the nation.
According to Asian Paints, the company's consolidated financials would show a loss of about ₹90 crores from the sale of its Indonesian operations, subject to any necessary adjustments at close.
Impact on Stock Prices
Following the news of the divestment, Asian Paints shares, which are already under a lot of selling pressure due to the increasing competition in the paints sector, fell 1.5% to the day's low of ₹2203.10. The stock is currently trading near ₹2,186.35, which was its 52-week low. Meanwhile, the stock has fallen 54% from its 52-week peak of ₹3,394.00.
The share price of Asian Paints has dropped 27% in the previous six months and 25% in the last year.
Due to a dismal festive season and muted urban demand, the corporation saw a drop in revenue and earnings during the third quarter of the fiscal year 2024–45. Due to an unfavorable product mix and operational deleverage, EBITDA margins shrank 344 basis points to 19.1%, indicating margin pressure.
Given the continuous pressure in urban markets, management continues to take a cautious approach to demand recovery over the upcoming quarters. Demand in rural areas is still comparatively better. In Q4FY25 and Q1FY26, a favorable monsoon is anticipated to significantly increase rural consumption. For FY25, the company has projected single-digit volume growth.
It has been advised that, with the help of moderate raw material costs, margins will stabilize in the 18–20% area.
0 Comments