Analyst

Date : 22/03/2021 JOJO SHAJU

Kochi Jojoshaju4444@gmail.com
 CUPID Ltd
Sector : Personal Products Industry
Industry : Contraceptives

Industry Overview
The Indian Condom market is huge compared with other markets because of high CMP ₹221.0
population in India. The market is expected to reach US$ 508.36 Mn in 2027 from
Market Cap 306.00 Cr
US$ 183.46 Mn in 2018. The market is estimated to grow with a CAGR of 12.2% from
2019-2027. Rising young population & chances of population control measures is Total debt --
the major reason for Indian markets seems to be attractive. Pricing and promotion of Cash equivalents 32.00Cr
consumer goods have a significant impact on sales of this products in India. EV 285.00Cr
Optimum distribution strategies involve bulk discounts, free delivery, and online
Dividend Yield 1.96%
purchasing options, which are among the factors that have significant long and
short-run effects in this markets. The major players in the Indian market is Alkem Beta 0.96
Health Care, Reckitt Benckiser Group, Raymond Group, TTK Group, HLL Lifecare Ltd, Book Value 87.3
Mankind Pharma, Okamoto Industries. Face Value 10.0

Company Overview
Incorporated in 1993, Cupid Ltd is one of leading condom manufacturing company in P/E 9.29
India. Cupid has the manufacturing facility in Nashik, India. They operates
predominantly in the B2B space where they caters the need for Governments and P/B 2.55
institutional buyers worldwide. Thus majority of the revenue comes from exports. P/C 16.23
They also engaged in contract manufacturing business, whereby we undertake P/S 2.07
contracts and manufacture products under other customers brands. With sales to 8 EPS 29.87
new countries during the year 2020 through UNFPA, the company has sold its
Industry P/E 7.67
products to over 80 countries worldwide. Cupid Ltd has a design patent on its female
condom, in which it uses a special sponge based design to improve comfort, as **Industry P/E taken from the www.moneycontrol.com

opposed to the standard design of its competitors.

 Cupid Ltd
Board of Directors
Mr. Omprakash Garg Chairman & managing director RoE 34.73%
Mrs. Veena Garg Non executive & non independent director RoCE 50.37%
Mr. Suresh Chand Garg Non executive & non independent director
RoA 24.18%
Mr. Pradeep Kumar Jain Independent & non executive directors
Mr. Jandhyala L. Sharma Independent & non executive directors Operating ROA 41.31%
Ms. Nalini Madhusudan Mishra Independent & non executive directors Gross Margin 69.02%
Operating Margin 32.46%
Financial Highlights Net Margin 24.71%
As per 2019-20 financial data
Company had delivered good profit growth of 38.78% CAGR over last 5 years
Median sales growth is 35.95% of last 10 years
Maintained a healthy dividend payout. On average last 3 years, the payout ratio is
30%.
Company has a good return on equity (ROE) track record: 3 Years ROE 32.63% Debtor Turnover 4.99
Inventory Turnover 4.10
Con--call Highlights
Con Payables Turnover 4.15
Cupid registered four new brands of Cupid male condoms in US and female Current ratio 2.27
condom under Angel brand. They are expecting approval and sales revenues by Cash Ratio 0.62
the end of 2022.
Interest Coverage 100.72
Joint venture with Invex Health for the production of rapid testing kits and ELISA
Kits Debt/Equity 0.59
Order book of ₹120 crore as on October 01, 2020 Financial Leverage 1.44
In last quarter, the trade receivable comes down from 41 Cr to 25 Cr, short term Total asset turnover 0.98
working capital borrowing comes down from 31 Cr to 12 Cr and trade payables
from 21 Cr to 6 Cr.
 Cupid Ltd
Strength
Virtually debt free
In house R&D centre
Healthy Order book from international bodies
and Government organisations
Second company in the world which got the
pre-qualification from WHO/UNFPA for the
female condoms
Maintaining a healthy dividend payout
Opportunities
High usage of the product
Online sales and entry into B2C space
Rising population and high possibility of
population control measures in future.
Entry into US markets and scope of female
condoms in this markets
Weakness
Low market share in B2C space
High dependence in key markets
Low capex and expansion plan even they
have huge opportunities ahead
Succession plan of CEO is still uncertain. Has
not appointed anyone for quite time.
Threats
High number of established players in the
industry
Price caps on condoms imposed by Drug
Controller of India
Chance of foreign government stop or
reduce funding on the STD programs which
will affect the exports
Rising number of sterilization will reduce
demand for condom
 Cupid Ltd
Company Milestones

Cupid Ltd commenced the business in condom manufacturing(1993)

Listed on BSE (1995)
First export order (1998)
1993-2000

Expanded capacity from 160mn to 400 mn per annum (2007)

First export order for female condom from South Africa (2010)
2001-2010

Pre-qualification from UNFPA/WHO (2012)

Commence production of Lubricant jelly (2015)
Listed on NSE (2016)
Exported water based lubricant jelly to central American country for first time (2017)
2011-2020
 2020 Highlights
EPS Shareholding Pattern
₹1612.5 Mn 35.00
NET SALES P/E30.00 101.56
P/B25.00 1.81
₹523.4 Mn P/C 65.
45.06
20.00
OPERATING PROFIT EPS 1.28
15.00 54.91
Book Value 71.82
₹398.4 Mn Div10.00
Yield 1.15
5.00
PROFIT AFTER TAX 0.03 0
-
Jan-17 Jan-18 Jan-19 Jan-20 Promoters FIIs DIIs Public

Revenue growth Share Price Price to earning

16000 400 16.00
100.00% 14000 350
12000 300 14.00
10000 250 12.00
80.00% 8000 200
6000 150 10.00
4000 100 8.00
60.00% 2000 50
0 0 6.00
4.00
40.00%
2.00

Nifty 50 Cupid -
20.00% Jan-17 Jan-18 Jan-19 Jan-20

0.00% Cupid Ltd is the second company in the world after Female Health Company to obtain a
WHO pre-qualification for female condoms and is presently in the process of acquiring
-20.00% USFDA approval.
 2020 Highlights
Total assets Return on capital employed Return on equity
70.00% 45.00%
18,000.00
38.05% 38.51%
57.94% 40.00%
16,000.00 60.00%
50.37% 35.00%
14,000.00
50.00% 30.00%
12,000.00 26.03%
38.47%
10,000.00 40.00% 25.00%
20.03%
8,000.00 26.94% 20.00%
30.00%
6,000.00 15.00%
20.00%
4,000.00 10.00%
2,000.00 10.00% 5.00%
- 0.00% 0.00%
Jan-17 Jan-18 Jan-19 Jan-20 Jan-17 Jan-18 Jan-19 Jan-20 Jan-17 Jan-18 Jan-19 Jan-20

6,000.00 100.00%
Product Portfolio
5,000.00 80.00%
Share Price Details Male condoms
4,000.00 60.00%
Female condoms
Current share price 221.00 Net profit
3,000.00 40.00%
52 Week High 296.75 Lubricant Jelly Operating Profit
52 Week Low 120.00 2,000.00 20.00% Revenue growth
VWAP 225.39 Hand Sanitizer
Market Cap (Rs Cr.) 306.00 1,000.00 0.00%

Average daily volume 89123 Hair removal cream

- -20.00%
Medical Devices Jan-17 Jan-18 Jan-19 Jan-20

Price 1 Month 3 Months 1 Year 3 Years 5 Years

Performance 4.80% -10.50% 36.85% -2.73% -19.72%
 Cupid Ltd
Investment rationale
Current Price ₹221
Cupid Ltd currently serves to Govts and Institutional clients. As it is not
Price target ₹360
sustainable in future, they started to look into the B2C space. Overpopulated
countries and awareness of Sexually transmitted disease (STD) will drive the Target period 2 years
demand for the product. Cupid has the unique feature of frontrunner in female Annual Volatility 52.77%
condom supplier accredited by the USFDA. The highlight is profit margins of Risk High
female condom is around 50% while the male condoms is around 15%. The
Recommendation BUY
company focus on female condoms by expanding its market abroad, especially in
US will drive the profits higher. The company P/E is 9.72 and median sales growth
is more than 30% per annum for the last 10 years.

Valuation
FY 2019 A FY 2020 A FY 2021 E FY 2022 E FY 2023 E FY 2024 E
Revenue(Lakhs) 8546.69 16125.05 16933.69 19291.21 22017.33 25175.45
Revenue growth 6.04% 88.67% 5.01% 13.92% 14.13% 14.34%
EBITDA(Lakhs) 2056.40 5233.72 5496.18 6261.36 7146.18 8171.21
OPM 24.06% 32.46% 32.46% 32.46% 32.46% 32.46%
PAT(Lakhs) 1520.91 3984.05 3802.55 4264.16 4803.43 5433.20
YoY Growth -11.01% 161.95% -4.56% 12.14% 12.65% 13.11%
EPS (Rs) 11.40 29.87 28.51 31.97 36.01 40.73
Debt/Equity 0.22 0.59 0.53 0.57 0.50 0.57
ROCE 26.94% 50.37% 41.46% 37.90% 35.32% 33.42%
ROE 19.79% 34.73% 29.78% 26.30% 25.39% 23.00%
P/E 21.41 8.51 10.51 13.42 14.42 15.42