- Asian Paints’ price-to-earnings ratio is at 80.1
- Paint maker has climbed 29.5 per cent in the last six months
- Asian Paints’ net income has risen to Rs. 830 crore
Surrounded by all the doom and gloom around the consumer sector, a paint producer got so much love from investors that it is now the most expensive stock in the country’s benchmark index. Asian Paints’ price-to-earnings ratio of 80.1 makes it the highest valued on the S&P BSE Sensex Index. The paint manufacturer has climbed 29.5 per cent in the last six months — when the broader gauge was up 6.7 per cent — and has hit a record high in the past month.
Investors value its ability to churn out a record profit at a time when management at other consumer-oriented companies have warned of the impact from an economic slowdown. Of the 39 analysts who cover the stock, just four have the equivalent of a sell call. Country’s paint industry, which Asian Paints dominates with around 40 per cent market share, has been viewed as a haven.
“Asian Paints is likely to keep rising” thanks in large part to double-digit growth in its volume of paint sales, said Abhijeet Kundu, an analyst at Antique Stock Broking, who estimated the increase to be 15 per cent-17 per cent in the last quarter. “There are very few companies that are growing at that kind of rate.”
Asian Paints’s stellar performance is a contrast to its consumer peers. Titan Co, the country’s biggest jeweler, plunged 10 per cent last week after nearly halving its growth guidance for the second half of the year. Srinivas Phatak, chief financial officer at Hindustan Unilever, country’s biggest consumer goods company, said “the demand outlook is definitely challenging” in an earnings call last month.