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Cupid – Niche Manufacturer of Condoms in India. Up for Sale!

Updated: Sep 21, 2023

Company Name – Cupid Limited (Cupid)

Current Share Price – INR 252 (June 26, 2023)

Market Cap – INR 335 cr


1. What is interesting about the stock?

India has surpassed China as the world's most populous country. The reason for India's high population is due to its citizens' tendency to have large families. The African continent is also experiencing rapid population growth, which has both positive and negative implications. On the positive side, the growing workforce could be a source of economic growth. However, the negative side of this growth is that providing food, water, and other resources for the increasing population poses a significant challenge.

When used consistently and correctly, condoms are still one of the most effective methods of preventing both STIs and unintended pregnancies. The use of latex in the 1920s was a significant breakthrough in condom production. Latex condoms were more durable, and flexible, and provided better protection than previous materials. This innovation led to increased acceptance and popularity of condom use. Cupid Limited is one company that specializes in manufacturing condoms.

Cupid Limited is a prominent Indian manufacturer and supplier of high-quality male condoms, female condoms, water-based lubricant jelly, and IVD kits. The Company was founded in 1993 and is headquartered in Sinnar, Nashik, Maharashtra. Cupid became listed on the Bombay Stock Exchange (BSE) in 1995 and began commercial production in 1998 with an annual capacity of 160 million pieces. The first export shipment was to South Africa.

The production capacity gradually increased to 400 million pieces per year by 2008. In 2007, Cupid launched an R&D program to manufacture Female Condoms. After complying with all regulatory requirements, WHO/UNFPA Pre-Qualified its Female Condoms for public distribution worldwide in July 2012. Cupid became the first Indian company, and the second globally, to supply WHO/ UNFPA Pre-qualified Female condoms. With exports to over 90 countries, approximately 92% of the production is exported in Q4FY23.

In 2015, Cupid began manufacturing water-based lubricants. Currently, the Company has an annual production capacity of over 480 million pieces of male condoms, 52 million pieces of female condoms, and 210 million sachets of lubricant jelly.

However, not everything is hunky dory in the Company. So, what’s happening?

  • Promoter is looking quite fatigued in running the Company and is looking to exit. He has said that openly on a quarterly investor call and also gone ahead in quoting the exit price – INR 300!

  • Company is sitting on INR 100 cr of cash which is ~ 33% of its current market capitalization. But the management hasn’t returned the cash to shareholders and lacks clarity. They started the IVD division in the last few years and the division is not meeting expectations (possible issue with capital allocation?)

  • Capacity hasn’t increased in the last few years even when capacity utilization was 94% in FY23

  • Company has been looking for a CEO for the last 3-4 years but hasn’t found anyone qualified

Why invest in Cupid?

  • Strong relationships with multi-national organizations and other governments – most of the business is based on tenders

  • Order book of ~ INR 180 cr as of April 1, 2023

  • Cash balance of INR 100 cr

  • High ROCE/ROE in a hyper-competitive business segment

2. Key Historical Financials

  • Company revenue and net profit have grown at a CAGR of 15% and 13% respectively in the last 5 years but have been flat over the last 3 years

  • Revenue growth was 23% in FY23 and 34% in Q4FY23 on a YoY basis after falling in FY21 and FY22

  • EBITDA margin contracted from 33% in FY20 to 17% in FY22 as the revenue fell (negative operating leverage) and higher raw material prices

  • Cash flow conversion (CFO/EBITDA) was 72% in FY23

  • ROCE and ROE recovered to healthy levels – 27% and 21% respectively

3. What is my view on company valuation?

Cupid’s share price has risen by 15% in the last year due to improved company performance. However, there may have been some factors as discussed earlier that caused a decrease in the P/E multiple. Currently, the Company's P/E (TTM) ratio is 10.6x, and the EV/EBITDA ratio is 6.8x, which is consistent with its 5-year median P/E ratio of 11.2x. With expected growth rates of 10-15% in the near future, the current valuation appears reasonable. Nonetheless, for investors looking to invest for the long term, it may be wise to hold off until the stake sale of the Promoter is completed, even if the price is higher than the current level.

4. What are the risks to the investment analysis?

Risks to the analysis are:

  • Company hasn’t invested much in building a D2C brand

  • Hyper competitive market – tender-driven business

  • Volatile raw material prices especially natural rubber latex


About the Author

I have over 17 years of experience in venture capital, private equity, and investment banking across various sectors in India and the Middle East. I was last working with Majid Al Futtaim Holding (MAF), a leading conglomerate in the Middle East, to look after investments, M&A, and venture capital. I have prior experience in India with Tata Capital (Private Equity), Merrill Lynch (Investment Banking or IB), and Ambit Corporate Finance (IB). I bring the long-term ownership mindset to the analysis.

I graduated from the MBA program of the Indian Institute of Management Lucknow (2005) after completing the Bachelor of Technology program at the Indian Institute of Technology, Kharagpur (2002).

I am an Insignificant Investor in the public market and co-founder of SocInvest.


I have no stock, option, or similar derivative position in any of the companies mentioned in the last 30 days, and shall not initiate any such positions within the next 5 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SocInvest). I have no business relationship with any company whose stock is mentioned in this article.

I am not a SEBI registered advisor. This article is purely for educational purposes and is not to be construed as investment advice. Please consult your financial advisor before acting on it.

I have used publicly available information while writing this article.



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