This is rather a severe dent in the margin. Expenditures have risen across the board. The raw material costs have gone up by around 9 per cent to 60 per cent.

Even though the scrip has risen to Rs 60, with the background of the latest results, the uprise is unlikely to be sustained. The dividend payout at 30 per cent is good. And even the return on networth is close to 20 per cent. Therefore, one would have expected the scripto command a price of Rs 120. But markets carefully take note of the margins; in other words, despite the improvement in turnover figures, which are impressive, market will definitely take note of the dent in operating margins. And that would be the reason if the scrip fails to find favour.

Godrej Soaps
Godrej Soap's move to hive off the chemical division will be welcomed by the market. Globally, the chemical business has lost its charm for equity investors. Chemicals have acquired the nature of commodity business. Even the Henkel group, which is into speciality chemicals has always oriented towards converting its special research knowledge into products in the consumer category. For Godrej, the chemicals was contributing just 35 per cent of its turnover. And again, hiving off the division always implies the possibility of selling the division in futre.

Godrej is planning to introduce a new soap in the next quarter and also add another two hair care products by July. The personal products marketin India is growing at a fast clip. It also affords scope for earning high margins.

With the country's gates being opened wide for import of consumer goods, Godrej's clever move to Indianise personal products should help it fight imports. While the scrip is trying to move up from the level of Rs 35, it would take a while for it to reach the levels of Rs 55. So currently, it qualifies only as an investment with a long term view. But that is not bad as the gains could be sizeable. The fact that the downside risk is very minimal makes the stock even more attractive.