That is a risk you have to live with B2G (G type) business models i believe. The diversification of business and its scalablity could help
I think one should look at the opportunity size for female condoms. When the opportunity size is large and growing day by day like it seems to be for the industry cupid operates in, the odds will likely be stacked in favor of the players in that industry ( cupid will be one of them ).
I found a document that lays down the business case for investing in female condoms ( apologies if it has been already posted before in this thread )
Ultimately, female condoms save lives and help people climb out of poverty giving them a much better shot at life. Its a powerful product and i would bet my money on it.
I agree, this is one thing to keep a watch on. They are also trying to expand/diversify into new products like a cream for the prevention of vaginal infections, Rapid HIV/Multi-Test Kits etc. They recently planned to raise equity, not sure they have clarified yet on exact purpose.
Since enough clarity is not there - hence the stock is cheap. Once clarity comes - it will come at a price.
Cupid’s management commentary has been cautiously positive and confident of order pipeline. Still awaiting the quarterly result conf call transcripts. The leadership issue is crucial and hope that it will be addressed sooner than later.
In the most recent Oct 2016 transript, Mr Garg mentions that the FDA approval ( which will take ~ 24 months ) will open up the USAID market for them.
I went through the https://www.unfpaprocurement.org website and accessed the USAID funded condom orders.
Here are some of the observations
Over the last 21 years USAID has placed condom orders ( male & female ) worth $498 million which translates to about 166 crores a year on an average ( assuming an exchange rate of $70).
This market is currently unavailable for Cupid. If it gets a 20% market share , we are looking at an additional revenue stream of 33cr per year about ~24 months down the line.
Here is the USAID data file USAID.xlsx (292.1 KB)
When you look at the master database of ALL orders across ALL funding agencies ( not just USAID) over a span of 21 years it appears that there are 163 NON US markets of which CUPID has tapped only 30 - this means 133 Non-US markets Cupid has not even opened its account.
So even if the US FDA approval takes time there are still untapped Non-US markets to get into for Cupid.
Going forward there are multiple revenue streams that are visible to me. The odds that at least some of them will fire seem pretty high to me.
- Push on the Domestic B2C business
- Repeat Orders from the existing 30 export markets
- New Orders from the untapped 133 export markets
- Domestic Orders from India
70$ seems pretty high for a 21 year period…regardless even if the market size is small and unquantifiable due to inadequate data, it is still a new product which will grow with acceptance…the real trigger for Cupid though will be its B2C business…
It seems competition is increasing and companies are now making NITRO SAMINE FREE Condoms . Is CUPID nitrosamine FREE ?
These are first world vanity products.
Cupid increasing the share capital base from 12 crores to 16 crores pending shareholder voting.
One basic question: Does this mean the promoter shareholding will go up? if yes, by approx how much?
what was the reason for stock going up by 8% on Friday. I could not find any news that could be linked to such rise.
Sales till 3rd Qtrend 65.05 Cr and sales for FY 16 :61.15 Cr even if we consider moderate growth in Q4, there will be 30% growth earnings yoy, with PE of 17 .58, it seems to be good bargain at current levels.
Other members …plz provide your thoughts
I did some scuttle on female condoms. Asked some colleagues - the broad consensus was FC’s are inconvenient to use and not very usable at first. I hope cupid finds a way to address that part.
Same here,checked with doctor friends. As per them, b2c acceptance among general public is highly unlikely due to inconvenience factor ,so, as of now m not counting much on b2c female condom business
It might be a big factor in long term story for this stock:
While this is focused on US but I have read reports on how increase in TV viewing decreased sex in India. While these might not impact in short term, it is a serious concern in long term
Separating noise from the narrative is a very valuable trait to possess. News and studies of the kind above are noise.
He he! You remind me one interesting event of my school days. My class 5 civic teacher was explaining reasons for population explosion in India. The last one was lack of entertainment options in India. We did not have widespread adoption of TVs back then. Well, I did not understand this point well and he could not explain despite 2-3 attempts.
IMO, contraceptive consumption depends on % of young people as they drive it. Grown ups know how to manage even without contraceptives
Availability of tea, coffee, carbonated drinks, fruit juice & other liquids does not reduce the thirst for Water. Similarly need for Sex is physical & genetic, it is never going to be exchanged in lieu of entertainment as long as procreation is needed by mother Nature. Hormones are more powerful than intelligence.
Female condom is in the early stage of “building of need”. Male condoms took more than 20-25 years to become popular. FC are more popular in poor women as they want to have less children & they are getting it free. In addition it prevents AIDS, which has higher prevalence in African countries. USA & Europeans women carry male condoms, not dependent on male behaviours. Poor women want to hold their destiny in their own hands. Use of contraceptives will reduce poverty & burden of sex related disease in African & other poor societies. Need of FC is going to increase, it is a matter of time only.
If one has to read about social trends to judge the prospects of this story, then this isn’t a bad read
@rajpanda Cupid should spend more on education of young vulnerable Girls by some innovative ways. Right now knowledge of FC is very very limited even among doctors. Sex is not a taboo any more only its consequences are. Victim is the girl only. If well advertised FC will become popular. It can become even more popular if it is not visible.