Cupid Multibagger

Cupid Ltd Multibagger Buy For Target Price Rs. 509

Cupid Ltd is already a mega multibagger stock. It may may become a multibagger even from this stage because it has reported good Q3FY17 results. The results are the strongest quarter for the Company till date. The net sales jumped ~77.3%/28.5% YoY/QoQ to Rs 276.7 mn due to strong order execution along with increased contribution from its new lubricant jelly segment.

Revenue up by ~40.5%: Cupid Ltd posted its highest revenue of ~Rs.276.7 mn in Q3FY17 vs. Rs.156.1mn/215.3mn, a growth of ~77.3%/28.5% YoY/QoQ respectively. This growth was driven by strong order execution of male and female condoms along with the water based lubricant jelly. The male and female condoms business contributed ~41%/49% respectively and the balance 10% was from the lubricant jelly registering a sales of ~Rs.28 mn. We expect that the company will grow at a CAGR of ~22% over FY16-19e backed by growth in the female condom segment through aggressive domestic promotion, and the initiation of lubricant jelly sales.

EBITDA growth by ~67.7% YoY:

The EBITDA of Cupid Ltd stood at ~Rs 102 mn vs ~Rs.60.8mn/84.9mn, showing a ~67.7%/20.2% growth YoY/QoQ respectively. EBITDA margin contracted to ~37% by ~209 bps/254 YoY/QoQ respectively. The contraction was a result of increase in other expenses primarily towards sales promotions. We believe that on conservative basis Cupid Limited will maintain a healthy margin (EBITDA growth of ~21% CAGR over FY16-FY19e) due to its product mix favoring the high margin female condom and water based lubricant jelly.

Order book details:

Cupid Ltd received an order from UNFPA worth ~Rs. 101 mn in Q1FY17. This is in addition to the US$ 16.28 mn long term order received in FY16 which is to be executed up till June 30, 2018. As per this order, Cupid Ltd will supply male condoms worth Rs. 67 mn and female condoms worth Rs. 34 mn in FY17.

The company had also received orders worth ~Rs. 135.8 mn with PSI India Private Ltd. and an order worth ~Rs. 30 mn for its recently started lubricant jelly. As on 31th December, 2016, Cupid has confirmed orders worth Rs.729 mn.

Expanding product basket:

Cupid Ltd. is looking to expand its product basket by introducing multiple new products. The Company is going to establish a Class 100 manufacturing facility (Clean Room Environment) for Sterile Lubes and is also looking to manufacture a cream for the prevention of vaginal infections. Along with this, Cupid has initiate R&D program to manufacture Rapid HIV/Multi-Test Kits.


Cupid Ltd has high potential to outperform over longer tenure on back of a healthy order book and increasing focus on domestic marketing of female condoms. The stock is a ‘BUY’ with a price target of Rs. 509 (59% upside), assigning 20x PE to FY19e EPS. The stock currently trades at 17.1x/14.9x/12.6x of FY17e/FY18e/FY19e.


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