From Boardrooms to Trade Rooms: A Week of Big Decisions

Indian stock markets had a stellar week, fuelled by easing geopolitical tensions and trade optimism. The Sensex soared 3.62% to a record 82,330.59, while the Nifty 50 jumped 4.21%, breaching the 25,000 mark. Positivity from the India-Pakistan ceasefire and progress in U.S.-India trade talks lifted investor sentiment, adding a whopping $300 billion to market wealth. While Friday saw some profit-booking, mid- and small-caps shined brightly. Defence and realty sectors stole the spotlight, even as the rupee ended slightly weaker at 85.5050 per dollar. A week to celebrate!

While one globally renowned giant considered selling its stake in an Indian company (RIL – Asian Paints), another took a bold step and sealed the deal to acquire a significantly larger share in a different Indian firm (SMBC – YES Bank). Meanwhile, beyond India’s borders, the world’s two largest economies decided to hit pause on their ongoing trade dispute.

Here’s a quick round-up of these three major developments — all worth keeping an eye on. 

Reliance Industries Eyes Exit from Asian Paints 

Buzz on the street earlier this week was that Reliance Industries (RIL) was looking to sell its 4.9% stake in Asian Paints (APNT) via block deal. RIL presently holds 4.9% stake (or 46,987,850 shares) in APNT through its entity Siddhant Commercials Pvt Ltd.

Street chatter suggests pricing mismatch between RIL and potential buyers, leading to a no-deal this week. But the bigger question remains – is APNT a good buy?

Let’s take a top-down approach, beginning with the paints industry outlook. Our channel checks suggest that the market is experiencing sluggish growth across regions and categories. Retail demand is notably slower, while B2B and project businesses are relatively better-performing segments.

Industry growth has been modest at best and is not anticipated to witness significant acceleration in the near term –

Source: InCred Research

The company acknowledged the growth slowdown and the better performing industrials segment, in its recently held analyst meeting. They also noted that demand was slower in Tier 1 and Tier 2 cities compared to Tier 3 and Tier 4 markets.

Investors have taken note of the slowing industry growth, as evidenced by declining share prices of major paint companies in India (underperformance to Nifty) –

Source: Bloomberg

In an already slowing industry, dominated by top 4-5 organized players, new player Birla Opus announced entry with an outlay of INR 10,000 crore and is already the second largest player by installed capacity –

Source: InCred Research

Source: InCred Research

Our channel checks suggest that Opus is gaining traction by adding dealers and increasing visibility initiatives. Per Berger Paints management estimates, Opus is on track to reach its target of 50,000 dealers by year-end.

Furthermore, Opus has positioned its products at a 14-15% discount compared to APNT and other leading players, intensifying competition in the market.

Consequently, gross margins are expected to remain under pressure as Opus is aggressive on pricing, discounts and rebates –

Source: InCred Research

Per our channel checks, while APNT is still the leading brand for most dealers, it is facing challenges due to high competition, reduced dealer margins, and undercutting from wholesalers. The company echoed these issues in its most recent analyst meet.

APNT has been feeling the pressure of rising competition too, as reflected in its declining market share. New entrant, Birla Opus, has quickly captured a mid-single-digit market share, driven by rapid dealer additions and competitive pricing strategies.

Per Berger Paints management estimates, Birla Opus is on track projected to achieve net sales of ₹20-21 billion for FY25 and no reported supply constraints. They also estimate a sequential improvement in market share for Opus.

Source: InCred Research

Therefore, APNT is facing two clear issues –

• Slowing industry growth

• Heightened competition

To navigate growth challenges and drive recovery, the company outlined several strategic measures, including backward integration, improved sourcing and procurement efficiencies, and enhanced cost optimization initiatives.

However, Birla Opus has emerged as a formidable competitor, leveraging strategic advantages as part of the Birla group. While the company has successfully tapped into new dealerships, it also benefits from a significant overlap with Birla’s existing network of 50,000+ white putty dealers. The combination of the trusted Birla brand, an expanding dealership base, and attractive price points positions Birla Opus as a serious player in the market.

Adding to the competitive intensity, JSW Paints is poised for expansion through its acquisition of Akzo Nobel, which could further reshape the industry landscape.

View – Given these dynamics, it may be prudent to adopt a cautious stance and press pause on investments in the paints sector. Observing how demand evolves and how competition unfolds in the coming quarters will provide better clarity for future decisions.

Here’s InCred’s latest report on APNT -  https://research.incredresearch.com/Company/Index/8?ReportId=3880

SMBC Strengthens Foothold in India with YES Bank Stake Acquisition

Sumitomo Mitsui Banking Corp (SMBC) signed a definitive agreement on 9th May 2025 to acquire 20% equity stake in YES Bank for INR 13,483 crore, valuing YES at INR 67,411 crore (purchase price INR 21.5 per share).

• State Bank of India (SBI) will sell 13.19% of its 24% stake for INR 8,889 crore.

• Private banks—HDFC, ICICI, Kotak, Axis, IDFC First, Federal Bank, and Bandhan Bank will collectively divest 6.81% of their holdings for Rs 4,594 crore.

Under the agreement, SMBC would be entitled to appoint two directors to YES Bank’s board.

Quick recap: Following asset quality concerns, governance issues, losses on its book, and inadequate capital, the RBI had put the bank under a 30-day moratorium and appointed Prashant Kumar (then CFO and Dy MD of SBI) as the administrator.

The RBI also drafted a reconstruction scheme wherein nine financial entities led by SBI bought c.49% stake in YES bank by infusing INR 10,000 crore and were required to retain 75% of their stake for three years. Lock-in for these institutions ended in March 2023. The 3-year lock-in was also applicable to secondary market investors in the bank.

YES Bank’s share price saw a sharp decline following the RBI announcement and remained at those levels through the lock-in period. The stock continued to trade at similar levels until 2025, up to the day before the SMBC stake announcement.

Source: Bloomberg

What this means for SBI: SBI's board has approved the sale of a 13.19% stake in Yes Bank (from its current ~24% holding) at ₹21.5 per share, yielding ~₹89 billion in proceeds. With an acquisition cost of ~₹43 billion, SBI will book net gains of ₹41 billion (6 bps of average assets) in FY26, post 10% capital gains tax. The impact on book value will be minimal (~0.6% or ₹3/share) due to existing mark-to-market accounting. 

What this means for SMBC: A 20% shareholding does not constitute a controlling stake, and even if SMBC were to acquire a controlling interest, RBI regulations would cap their voting rights at 26%. This raises the question: is this simply another investment by SMBC in India? Below is a snapshot of some of SMBC's investments in the country:

Source: Bloomberg

Or is the Japanese lender testing the waters with a 20% infusion, potentially paving the way for acquiring a controlling stake later? PE investors like Advent International and Carlyle could emerge as potential sellers. After all, it’s not unprecedented to hold a controlling stake in a bank despite the voting rights cap, as seen in the case of Bandhan Bank.

This also paves the way for SMBC to acquire a meaningful stake in a scheduled commercial bank in India – one that has moved past its most challenging period, achieved relative stability, and offers significant growth potential.

What this means for YES Bank: This deal marks a transformative milestone for Yes Bank, introducing a strong foreign anchor investor that boosts confidence while enhancing governance and global expertise. It shifts the narrative for YES Bank from recovery to growth.

Price-to-book of YES Bank and its peers per Bloomberg –

View – While we do not have coverage on YES Bank, its current valuation seems quite appealing. Its growth and transformation is expected to take time, so while the stock may not react in the near-term, the stock holds potential to offer compelling long-term returns.

Trade Wars Cool Down: US and China Forge Path Towards Cooperation

The US and China announced a trade agreement with an understanding to reduce tariffs. China will move from 125% to 10% whereas the US will move from 145% to 30% (fentanyl related additional tariff of 20%).

Source: CNN

What this means for India:

• The reintroduction of Chinese products into the supply chain could reduce demand for Indian goods. Additionally, the limited 90-day agreement may lead to increased stocking of Chinese goods.

• This trade truce could complicate India's negotiations on the proposed India-US trade deal. With the 90-day tariff suspension for India ending on July 9, it is crucial for India to secure an agreement with the US to safeguard its exports.

While this agreement is more of a temporary truce than a long-term deal, it signals the possibility of a more formal agreement between the US and China. Meanwhile, other nations like Israel and South Korea are actively pursuing agreements with the US, intensifying the need for India to act quickly.

The Global Trade Research Initiative (GTRI) projects a 6.4% decline in India's exports to the U.S. in 2025, amounting to a potential loss of approximately $5.76 billion. Sectors expected to be most affected include seafood, iron and steel, gems and jewelry, automobiles, and electronics.

President Trump’s controversial claims—such as mediating the India-Pakistan ceasefire or India agreeing not to levy tariffs on US imports—appear to be negotiation tactics rather than substantiated facts. These statements may complicate discussions, but I believe that India’s strong track record in global diplomacy over recent years makes it well-positioned to navigate these challenges effectively.

Weekend Recommendations by Yours Truly –

Indulgence – but make it healthy

As someone who is a HUGE fan of burgers, I’ve had the need to find a healthy option. The vegan burger from Kitchen Garden is a GREAT option.

Indulge – and sweat it out

I also make it a point to sweat out the calories, so that I can continue my indulgence guilt-free. I strongly recommend you do the same! Helps with a fit lifestyle and the post-workout dopamine hit is all worth it.

Rest well and enjoy the seasonal sky change –

Mumbai sky clicked by yours truly –

Have a nice weekend! Until next time, toodles!