Thanks for the update RJ. Have you initiated any discussion threads for the new opportunities that you are exploring / invested in? I am an admirer of your approach for bottom up stock picking. Would love to learn and contribute towards new ideas that you are considering. If it’s too early for you to discuss about any of them then I totally understand.
Please ask how they have utilised the QIP funds.
@rathiraunak71 thanks. please check on following:
- Any major order book opportunity coming in next 3-6 months from any existing/new client?
- B2C adoption of FC - any learning since as per few doctors, using is a cumbersome process and hence adaptability
- Any new insights on change in management structure, new leadership hiring etc
Few question listed here ->
A quick question from me, would be on succession planning?
I would like to know what efforts are they doing to sell cupid products in the domestic market since the potential is huge. And how much they are spending on online advertisement like on Amazon.
Cupid hires Chief BDO
There are several interesting aspects to the announcement.
- I am seeing name of Mr. Durgesh Garg -COO for the first time (he has signed the letter written to BSE/NSE) It means their company secretary has left the company or Durgesh getting more powerful in the organisation.
- Mr. Om Garg was talking for last 6 months about hiring a CEO and now he has hired Chief BDO. Does this mean plan for CEO hiring is postponed/cancelled or does it mean COO will be next in line to become CEO
- Recent share transfers from Mr. Om Garg to his wife and this announcement has any connection? Is Mr. Garg stepping out?
I may be reading too much into it but it pays to be skeptical in case of small companies like Cupid
Disclosure - sold all my shares 2 months back. No investment now.
Om Garg - CMD, Cupid Ltd, Nashik (India) recent interview
Disclaimer - No Holdings
Very nice to hear from Mr. Garg. He mentioned FY17 sales of Rs84-85crs. Looks like company can deliver EPS of Rs18 to Rs19 in FY17. Management highlighted that they are looking at hand sanitizers, sanitary napkins, baby diapers and vaginal creams as new product lines. Also applying for FDA approval. Also expanding capacity for male and female condoms and lubricants.
It is good that cupid is expanding it in other verticals. But hand sanitizer,diaper is more or less now become commodity. I am doubting how much margin cupid will enjoy on these products.
I also agree that Hand sanitizer /Sanitary napkins might not command the huge margins which FCs do.
However, I am hopeful they will more than make up lesser margins , by way of sales perhaps …
Also, it would be interesting to see how the recently introduced lubricants Jelly product, ramps up in sales from now.
Promoter Holding is down from 48.4% to 44.87% .
Some investing fund ELARA INDIA OPPORTUNITIES FUND LIMITED bought the 3.17% shares from promoters.
ELARA INDIA OPPORTUNITIES FUND LIMITED could have bought the shares from the open market. I’m not sure why the promotors of the company transferred and sold some shares. Maybe Mr. Garg is not very confident with the company or maybe something else. However I feel that taking such risks in this small cap company is not worth it.
Disclosure: Recently sold the shares
You should see the video which shared some comments above…else Mr garg didn’t tell about transfer of share but he telling the future path of cupid ltd. cupid is very good bet for longterm and cupid’s management is very transparent towards their shareholders.
The expansion plans doesn’t look impressive. All these categories are commodity grade with entrenched players. Do they want to become contract manufacturers? Secondly, raising fund for these expansions is not a great move. I would have been ok if they used their FCF for the same. All these categories will require brand building etc while they have not been a great success so far in their core competence of FCs.
Disc: watching but no holding
lots of cupid investors have become jittery lately because of all the unknown variables surrounding the promoters actions. Good bad i don’t know. Sometimes when hard facts are not known it helps to look at what prices are doing before taking a call and the news unfortunately is not encouraging on that front ( at least in the near term ). Have a look at the chart and my reading tells me that the nice little 60 day uptrend has been broken badly.
Fixation on prices is anathema to value investors i know, but if you look at the seasoned value practitioners ( Mohnish Pabrai for example), prices and value are joined at the hip. There IS going to be short term ( i hope it remains short term only ) pain.
But, now is the time to understand and revisit your thesis. To focus on the reason you invested in the company in the first place. If your confidence is going to weaken as the prices go down then its best to move on.
I think that the company is well poised to brand its offerings and pioneer the concept of female condoms in India under the Cupid name. Just get hold of a young popular female celebrity and make the use of FC’s cool . That will send the business into a different orbit and start an exciting new story with strong legs to run
For those who think that the business is going to do well in the future lower prices is a cause for celebration and averaging down would be a rational move. I dont see a marketing focus currently so i would wait for a decisive announcement on that front. Till such time it remains on the radar
Just get hold of a young popular female celebrity and make the use of FC’s cool . That will send the business into a different orbit and start an exciting new story with strong legs to run
I respect your analytical skills as you have demonstrated in other threads, but I think there are facets to FCs that make their marketing and use a little more nuanced than just slapping a pretty face and putting out ads in the media. You can disagree with me, but you may still want to avoid making such simplistic conclusions as the recipe for success.
Am not a marketing or an ad person.
Young popular celebrities have a direct impact on the minds of youngsters and help shape their preferences. India is lucky to have several of them. Cupid should utilize them and be the first to popularise the use of female condoms. Whatever the tone and manner of the ad, i think young urban indians adopt things faster if they are presented to them as cool. A celebrity led national brand campaign is the need of the hour.
IMO the big bang approach is fraught with danger. What if they are unable to service the market or acceptability is low. Their domestic distribution is still at a nascent stage. I feel their priority should be as following
- They should first decide what it wants to become. CMO, FMCG or niche sexual well being products company. Recent moves suggest they want to transform into a FMCG company. I would not be interested in that case. There is a very strong case for a niche sexual product company and investors would pay top dollar for the same.
- Generate FCF first or set up biz by raising funds - I would chose first since this is still a small company. They could focus on US FDA approval, more orders/contracts and allow word of mouth publicity to test acceptability in a wider national market before a big bang launch.
- Untill they attain critical mass, they should focus on niche low competition products.