Recommendation From Tea & Personal Product

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations. 

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GOODRICKE GROUP
CMP - Rs457
BSE CODE 500166
Volume 18362
Face Value Rs10 

Goodricke is the grower, manufacturer and seller of tea and instant tea across India and abroad. It currently produces 8 million kg tea per annum through its plants and also holds presence in packet tea market. In the premium tea category of Darjeeling packaged tea, Goodricke holds 54%-plus market share in Kolkata, the largest consumer of Darjeeling tea. The company’s high end domestic buyers include Airlines and the Indian Army. With a view to double its market share by penetrating further into Maharashtra, Bihar, UP and J&K through packet tea brand, the company recently acquired Godfrey’s packet tea business. Company has posted robust 31.8% and 147.8% revenue and PAT growth, respectively, in September 2017 as against Q2FY17. The company seems fairly valued in terms of its P/E trailing at 20x. We recommend Buy in the scrip with target and stop loss of Rs525 and Rs421, respectively.

CUPID
CMP - Rs285
BSE CODE 530843
Volume 17358
Face Value Rs10 

The maker of male and female rubber contraceptives earns its major revenue from exports (80.5% in FY17). Though the company has robust order visibility for FY18, it is expected to launch its products in other developing countries such as Brazil, Nigeria, Tanzania and Indonesia, which have substantial demand. The company has procured USFDA nod for female condoms for launch in developed countries like US. Apart from condoms, the company has plans to foray into the hand sanitisers, vaginal creams, ejaculation wipes and lubricant jellies. During November, the company received new order for supply of female condoms to Africa from the United National Population Fund and one more order from Central Medical Services Society for sale of male condoms, together contributing 30.7% of its FY17 revenue. Thereby, forecasting condom usage to increase to 44.7 billion pieces in 2021 from 26.5 billion in 2015, the company expects reasonable growth in coming fiscals. We recommend Buy in the scrip with target and stop loss of Rs317 and Rs265, respectively.