In fiscal 1998, the company's profit before tax has increased by 32 per cent from Rs 27.7 crore to Rs 36.5 crore. Due to lower tax provisions at Rs 6.6 crore against the previous year's Rs 7.5 crore, net profit surged from Rs 20 crore to Rs 30 crore. Net profit margin improved substantially from 4.88 per cent to 6.12 per cent. On an equity base of Rs 14.5 crore Marico's earnings per share works out to Rs 20.71 as against the previous year's Rs 13.85. The company has declared a dividend payout of Rs 7.5 per share for fiscal 1998. Currently its book value stands at Rs 68. During the year to March 1998, the company managed to improve itseconomic value added (EVA) from Rs 8.7 crore to Rs 18.8 crore.

In order to achieve optimal capacity utilisation, the company re-organised its production lines during the year. This, combined with aggressive marketing strategy led to double digit growth in almost each of its product line. Also, the company achieved 50 per cent growth in exports turnover, which surged to Rs 12.1 crore from the earlier Rs 8 crore.

Although Marico has a strong presence in the consumer non-durable sector with well known brands like Parachute, Safola, Sweekar and SIL, its vulnerability to commodity volatility results in it to trade at a massive discount to its peers on all valuation parameters. The scrip is currently trading at Rs 325 discounted by only 15.69 times. Although the scrip has been revalued recently, it touched a high of 360. However risks like concentrated portfolio and vulnerability to commodity volatility has not impressed investors.

Another risk associated with the stock is that about 70 per cent of thecompany's revenue comes from just two products, Parachute and Safola. These brands are not owned by Marico but by Bombay Oil Industries Limited (BOIL) which is a private company owned by the Mariwala family, the promoters of Marico. Marico owns only two brands Sweekar and Revive, which are low growth products in company's portfolio. The promoter have recently approved merger of group company KFL with the company and will now own SIL brand also. The merger would entail a tax break of Rs 8.5 core to Marico which will be used to retire its debt. This can lead to a substantial jump in net profits.