It was Reckitt's strategy of rejuvenating its old brands and introducing new products which appeared to have paid dividends last year. This aside, volume growth, a consequence of aggressive marketing in the insect control and domestic floor cleaner segments, has also helped send the revenue curve northward after a period of flat sales. Thus turnover at Rs 435.33 crore was up 14.73 per cent compared to Rs 379.43 crore for the year ended December 1998.

The revenue growth aside, perhaps most important for the company has been the minor rejuvenation of its operating margins. In fact operating margins, which were long depressed due to high ad-spend and marketing costs, werestagnant at 9.6 per cent for the 12 months ended December 1998. This again was largely due to volume growth achieved in products such as Lizol and Mortein. Obviously having a host of semi-generic brands like Cherry Blossom, Robin and Harpic also did help.

Interestingly, analysts state that the reduction in excise duties to 30 per cent in cosmetics and toiletries also helped. Although not directly, as all benefits were passed on to the consumers, Reckitt, however benefited from the increase in volumes.

Furthermore, the company's minimal exposure to debt has helped relieve the interest burden. In fact, the interest charges stood at a mere Rs 2.45 crore. Lastly, with a lower effective tax rate of 25.73 per cent, the company's bottomline had actually jumped from Rs 30.07 crore to Rs 31.47 crore for the 12 months ended December 1998.

An important factor which has been driving the stock upward is the company's changed business outlook. A fact clearly reflected in the scrip outperforming the Sensex, especiallygiven the bearish overtones in the Indian market. As far as the first half of 1999-2000 goes, the commissioning of additional capacities for mosquito coils, PCMX & Trilcoson and anti-malarial tablets should give a boost to sales growth. Thus even if the company were to maintain last year's growth trend, it should definitely end the year with an earnings per share in excess of the current Rs 10. On these earnings, the current P/E ratio works out to 38.3, which, given its multinational status, appears fair.