NOT A BUY RECOMMENDATION
⚕️ *CUPID LIMITED: BUY TP 450*⚕️
*Rationale for Recommendation*
🎯 Low Equity Base & DEBT FREE.
🎯 Liquid Cash of ₹72 crores incl. ₹67.26 crores in Funds (as on Dec 4) & ₹4.51 crores of Fixed Deposits. Equivalent to ₹54 per share. Effective stock price is ₹197.
🎯 More than 20 years’ experience. In-house R&D Center. Contract manufacturing (OEM).
🎯 First company in the World to have been prequalified by WHO-UNFPA for supply of both Male & Female condoms. Exported condoms to 80+ countries.
🎯 Cupid’s manufacturing facility is designed to facilitate world-class manufacturing of quality products with Hitech German Technology Dipping Line as per GMP guidelines.
🎯 *Cupid’s confirmed order book stands at approx. ₹120 crores as on Oct 1, 2020.*
🎯 Cupid’s board has considered and approved the Service Provider and License Agreement between Cupid Limited and Invex Health Private Limited for *manufacturing of Medical Devices including various testing kits/diagnosing kits by Cupid Limited.*
⭕ *Cheapest Medical Devices stock in peer group PE is 45+ whereas Cupid is trading at 8.4x (FY20), 7.63 (FY21E) and 6.32x (FY22E).*
⭕ *Fairly reliable estimate/news/rumour/HoS that promoter may be selling out and a very efficient 24 carat Industrial Group may become Cupid Promoter. If this surprise news comes, stock will be rerated with much higher valuations and possible that stock price is ₹750 in 2 years as this potential white knight has massive financial muscle and marketing reach. Even if this event is delayed or don’t happen, Cupid Fair Value and Target Price is ₹450 in 15 months.*
_*“During 2019-20, Cupid commenced export of female condoms to Brazil and also exported male condoms to Tanzania and South Africa. The order from Brazil is by far the largest single order Cupid has received in its 27 years history. Our continued focus on penetrating new geographies enabled us to win exports orders from 8 new countries through UNFPA. Till date, the Company has sold its products to over 80 countries worldwide.*_
_*We are currently evaluating the possibility of setting up a joint venture facility in South Africa to initially produce female condoms and eventually male condoms as well. We have discussed our technical and financial proposal with the Department of Treasury and Department of Health in South Africa. We immense potential in setting up a manufacturing facility in the region as the South African government wants to promote their local production.”*_ _~ Omprakash Garg, CMD_
*Products & Capacity*
Cupid’s manufacturing facility is located at Sinnar near Nashik, about 200 km East of Mumbai.
♀️ *Male condoms*, _480 million pieces per annum._
♀️ *Female condoms*, _52 million pieces per annum._
♀️ *Water Based Lubricant Jelly*, _210 million sachets per annum._
♀️ *Clean & Safe Hand Sanitizer.*
♀️ *Clean & Safe Hair Remover.*