Shares of Berger Paints rallied as much as 4.4 per cent to hit an all-time high of Rs 675.45 apiece on the BSE on Friday, a day after the company reported an increase of 13.55 per cent in its consolidated net profit at Rs 221.05 crore for the quarter ended September 2020.
The company had posted a net profit of Rs 194.66 crore in the year-ago period.
Revenue from operations grew 9 per cent to Rs 1,742.55 crore during the quarter under review as against Rs 1,598.58 crore in the corresponding quarter of the previous fiscal.
Berger Paints' total expenses were at Rs 1,471.97 crore in Q2 FY2020-21.
On a standalone basis, the company's revenue from operations came in at Rs 1 536.4 crore, representing an increase of 7.4 per cent YoY while net profit increased by 10.5 per cent to Rs 192.7 crore against Rs 174.4 crore in the corresponding quarter last year.
At 10:00 AM, the stock was trading 2.6 per cent higher at Rs 663.80 against a 0.61 per cent rise in the S&P BSE Sensex at 41,591.92 levels.
Analysts at JM Financial, in a result review report, notes that Berger expectedly posted a sharp recovery in 2QFY21 clocking a double-digit volume growth which is quite on similar lines as seen in Asian Paints. However, its valuation remains extremely rich at 77x FY22 earnings which represents a 30 per cent premium to its past three-year average.
"It is also quoting at a 25 per cent premium to its much larger peer Asian Paints while there is no material difference between the growth rates of the two companies. We find it extremely difficult to justify such premium valuations even after considering the attractive long-term opportunity for the industry and re-iterate our SELL rating," the brokerage said.