Investors pour into most expensive stock

By Ronojoy Mazumdar

Surrounded by all the doom and gloom around the Indian 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 Ltd.’s 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% in the last six months -- when the broader gauge has gained 6.5% -- 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 and other consumer-oriented companies have warned of the impact of an economic slowdown.

Of the 39 analysts who cover the stock, just four have the equivalent of a sell call. India’s paint industry, which Asian Paints dominates with around 40% 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 Ltd., who estimated the increase to be 15%-17% in the last quarter.