CUPID LTD.

SECTOR: Rubber Products 227.40

+0.90 (0.40%)

NSE: Today, 03:50 PM

NSE: CUPID BSE: 530843

Meaning

Cupid Ltd. was founded in collaboration with world leader Green mate Corporation, is a leading manufacturer of quality male condoms. It commenced commercial production in Jan 1997 under the strict supervision and training of Korean Technicians. Headquartered in Mumbai, it has one of the largest manufacturing facilities in India. The company has its marketing offices in New Delhi, India, and Cleveland, USA. Cupid Ltd. also has USA FDA approval to export its products to customers in the United States.

Cupid manufactures and markets varieties of Male and Female Condoms, Water-Based Lubricants, Latex Dental Dams, and Probe Covers. Cupid has a diverse product basket available in over 25 countries worldwide.

The ultra-modern facility having a current capacity of 360 million pieces per annum with pollution control measures and expanding is located about 200 km. from Mumbai, near the scenic resort town of Nasik. Cupid Ltd. is a public limited company listed on the Bombay Stock Exchange (BSE) since 1995.

Cupid Ltd. employs 250+ manpower with wide experience in production, maintenance & quality control working in three shifts having 24-hour operations. There is a dedicated team of quality personnel independent of production staff to ensure that every step of production follows the rigorous quality guidelines followed based on written GMP ( Good Manufacturing Practice) and documented procedure.

The product range of the company includes:

Male Condoms

• Plain Condoms in 49 mm and 53 mm width
• Dotted Condoms in 52+/-2 mm width
• Ribbed Condoms in 52+/-2 mm width
• Multi-textured Condoms in 52+/-2 mm width
• Extra Large Condoms
• Specialty Condoms for Extra Pleasure
• Ultra-Thin Condoms
• Extra Strong Condoms - to Cater MSM Community

Female Condoms

• Female Condom Natural Colour
• Female Condom Pink Colour

Water-Based Lubricant

Latex Dental Dams

Probe Covers

Achievements/ recognition

• ISO 9001:2000
• CE Certificate
• USFDA 510K Certificate

KEY POSITIVES

• High Dividend Yield.
• Company repaying all the debts, thus, reducing liability and interest expense for the future.
• Promoters increase their holdings over time.
• FII reinvests in June.
• Registration to sell in 8 more countries is in process.
• During Covid, Cupid entered into a partnership with Invex Health Pvt Ltd. To manufacture, medical devices such as medical/testing kits for Covid-19, malaria, dengue and HIV.S
• Approval to sell female condoms in the US by 2022.
• 4 new varieties of Male condoms were added in the US.
• Company assuming social responsibility through health and education departments.
• Company to start providing products in South Africa, starting from OCT 2021, renewing the tenders.
• Projected annual Revenue to be ₹170cr at minimum.
• Highly undervalued.

KEY NEGATIVES

• Other Costs of the company are increasing.
• High Material Cost during 2020-21.
• Company Raising capital through the issue of additional shares.
• No other income.
• A major decrease in revenues from the sale of female condoms.
• The management team doesn't sound confident during the interviews, moreover, the HR does not sound credible.

FINANCIALS

VALUATIONS

• According to the Discounted Cash Flow Valuation, the Total Present Value of Cash Flows is more than ₹700cr, thus, the company is undervalued and can be a good option to be considered for investment.

• By using Ben Graham's Formula to calculate the intrinsic value, market capital ranges from ₹516cr to ₹825cr, while the current market capitalization of the company is only ₹306. So, this also proves that the company can be a multi-bagger in the long run.

• By using, Dhandho book strategy, the intrinsic value ranges from ₹614cr - ₹1,060cr, which is much higher than the current market capitalization of the company. Again, it is proved that the company can be a good bid for investment purposes.

MARGIN OF SAFETY

• Current EPS: 21.78
• Estimated Future Growth Rate: 33%
• Estimated Future PE: 10.49
• The margin of Safety: 50%
• Minimum Acceptable Rate of Return: 15%
• Calculated Future EPS: 522.357
• Future Share Price: 5479.526
• Sticker Price: 684.94
• Buy Price: 342.47, As the current price of the share, is only ₹227.40, Can it be a good buying opportunity?

WRITER'S OPINION

• Cupid Ltd., no doubt is a great company, which manufactures at very low cost and their major aim is earning through exports. The company is always expanding its manufacturing capacity and also investing its resources and workforce in the Research department as well. Though management does not sound that confident in the con-calls, still, Financials and operating efficiency are remarkable. The company is always increasing its efficiency and management's attitude towards its production is also optimistic.
• Valuations of the company prove that, the company is undervalued and can be great growth stock and value stock.

What do you think, whether you should invest in this company and if yes, then for short term or long term?