Dalmia Securities
Cupid (Hold)
CMP: ₹296.50
Target: ₹309.1
Cupid is a leading manufacturer of quality male and female condoms head-quartered in Nashik, India. The company has one of the largest manufacturing facilities with in-house R&D facility.
Cupid Q3 FY18 number was below our expectation. Total revenue de-grew by 7.8 per cent q-o-q/25.7 per cent y-o-y to ₹21.07 crore due to reduction in the female condom procurement budget by the Government of South Africa and other reason for slowdown in the top line was due to delay in receiving the male condom orders from the Indian government.
Export revenue (72 per cent of Q3FY18 revenue) de-grew by 17.0 per cent q-o-q / 33.2 per cent y-o-y whereas domestic revenue (28 per cent of Q3FY18 revenue) was up by 29.1 per cent q-o-q / 4 per cent y-o-y.
Cupid’s order Book as on Dec 2017 is worth ₹71 crore. According to management, expected sales for the FY18 is about ₹85 crore. Production capacity expansion plan announced last quarter is on track. Expect ₹40-45 crore from female condom in FY19.
Outlook & valuation: Cupid is quite an interesting bet as its focus is clearly on exports, retail expansion and high margin products. Based on the FY19E EPS of ₹ 22.08 and our target multiple of 14.0x, we arrive at a target of ₹309.1, indicating a potential upside of 7.4 per cent.