Cupid Ltd – Helping the world play safe!


(Ankit Kohli) #928

A back-of-the-envelope calculation shows that the female condom order is lower than what Cupid and Mr. Garg were expecting. The INR 16.29 crore order translates to roughly USD 2.3 million. I recall the management saying that the per piece realization on female condoms is USD 0.3-0.34. So, it seems that we are talking about ~7 million female condom pieces for Cupid. Mr. Garg had mentioned that he was expecting 25-30 million pieces out of the total of 80 million up for tender, spread over a three year period. That translates to 8-10 million pieces a year.

Pending more color from the management, it is safe to assume one of the following has happened:

  1. The volume allocated to Cupid is lower than expected and other competitors have got more.
  2. If the volume is 8-10 million, then the realization per piece is lower, which will hurt margin.
  3. The SA govt may be looking at increasing volumes in the future and it might be too simplistic to assume a one third division every year – this is a possibility since there has been a lot of political noise around this tender in SA.

This order, I am hoping, is separate from the 20 million pieces that Cupid is expecting from the SA JV.

On the male condom side, I do not recall the per unit realization but do remember that Cupid expected 100 million of the total 600 million up for tender. Does anyone have the per unit realization for male condoms?

Regards,
Ankit


(amoghkamat) #929

For Male Condoms it is about 2 rs per piece


(vikas sinha) #930

Agree! Mr Garg was in last concall elaborating total revenue of 55 Cr from Female condoms alone, giving breakup as 40 Cr from SA order and 15 Cr from UN agencies and an NGO. Margins on Female v/s Male condoms is 40% vs 15%. This tender is disappointing, just inflating the topline. It is just 40% of what was expected.

Disc: Not invested, was interested, not anymore!


(Vilas D'Souza) #931

Today’s move also seems operator-driven since no fund houses own it and no bulk deals either.

Better to wait for the Q1 results to get a better idea.

As I mentioned to someone, TRUST MANAGEMENT WORDS 50% ONLY. Most of the guys look for info that makes them feel hopeful.


(EthicalWealth) #932

Find the screen shot of Mr. Om Prakash on downgrade of FC to class - II. Its a very big ease in regulatory norms to enter into USA market. And Garg says in next 6 to 8 months it will complete the filings into US FDA. Are these not positive trigger??? Obviously it is. For any investor who invests based on future prospects, downgrade to classII is a fantastic news…


(Vilas D'Souza) #933

Read carefully. The words are “could complete” and not will complete in 6-8 months.

Statements don’t become positive trigger for a rational investor.


(Subbu) #934

hi there

I agree that the tender value looks on the small side but we need to look at it from the total tender value. Can someone post what the overall tender allocation was? It is possible that the total tender value was 80 cr and Cupid got 40 cr of this. In that case this would probably be good news as Cupid got a higher share of allocation. Many thanks!


(EthicalWealth) #935

It dosen’t matter, really. It may even get completed in 12 months. no issues. Crux of the matter is that the reclassification to Class-II permits and eases the filings to US FDA. Its such a wonderful news that CUPID’s FC can enter into US market now or later… US is in the peak of culture where Female Condoms would get accepted very easily. Its not like India or Africa where practically ladies buying and accepting FC is very very hard.

If the crux of the matter is missed and just keep complaining for the sake of, I think, one would miss the great opportunity ahead.

One more important aspect never to be ignored is that If Female Condoms are getting filed into FDA, the company becomes more attractive for domestic/international acquirers too, in case Mr.Garg wishes to sell his company owing to his old age and no successors. This filing itself would increase the valuation of the company. If such scenario occurs and a reputed contraceptive company acquires CUPID in future, then nothing can stop it from becoming a multi-bagger too…

No successor to Mr.Garg is infact a blessing in disguise and increases the probability of a MNC acquiring the company in the future.


(Vilas D'Souza) #936

It feels good to dream about rosy and desirable outcomes. The price eventually ends up showing the mirror. In my opinion, nothing fundamental has changed yet to dream or re rate. Scalability is the key to “sustaining” a price movement.


(Growth_without Debt) #937

Impact of Cupid Revenue and Profit due to female condom entry in USA is not speculative. To know impact, i just compared Indian female condom (Cupid) and FC2 (the only condom approved in USA as Class-III devce)
FC2 price : $6 per count


Cupid Price: $2.6 per sachet (4 pcs)

Just see impact if cupid able to sell/supply Female condoms in millions per year in USA.
Currently due to its Class III classification, availability of female condom is also limited. Planned Parent Hood - NGO provides services in USA. .

Disc: with recent correction accumulation, Cupid %holding is the highest in portfolio. Hence, my view might be speculative!


(rohan.imhere) #938

The new tender is valid for a year while the previous tender was for 3 years. The figures in concall could be based on a 3 year estimate. Furthermore repeat of the tender to cupid only reiterates the acceptance of the cupid products which in itself is a positive news.

Disclosure- invested, views may be biased


(himanjim) #939

Reviews on Amazon are mixed one. This will take time to be accepted in society.


(Ankit Kohli) #940

@amoghkamat Do you know if this 2 rupee number is for the SA contract/bid or the GOI contracts or is it the company’s blended average? Can you point out the con call where this was disclosed.

If it is indeed 2 rupee for the SA business, then the male condom order is for 110-120 million pieces, which is higher than what the company was expecting.


(amoghkamat) #941

It was in their first ever concall. They had mentioned 1.7 rs per piece. If i have my facts correct they had no male condom business from south africa last time around. Correct me if i am wrong.


(Vilas D'Souza) #942

Basant Maheshwari exited long back. Was he able to visualize this revenue degrowth? And most here are stuck n trying to justify their bullishness? Most of the talks here are based on what the management “said”. Valuations depends not on what is said or promised, but what is delivered… And as Basant says, markets pT for growth.


(sagar_amula) #943

Businesses are always like this ups and downs, this company swings more because its sales is completely based on tenders and orders. There is no guarantee of getting the orders as it is commodity type business and is not a brand. They are trying to create one but still there is long way. The low cost producers have the highest chance of getting the orders.

Also Basant Maheshwari likes stability, clarity & consistence of growth, he might have exited because of lack of clarity of getting orders on a continuous basis, this is just based on his style of investing and what his approach is towards stock picking.


(Vilas D'Souza) #944

We all like stability n consistent growth. The ability lies in being able to see thru it. no business has any guarantees except the liabilities in the balance sheet


(Ankit Kohli) #945

You are right, bulk of the male condom business comes from UN + WHO, followed by GoI and Job Work. Per the management, SA’s contribution to male condom volumes is negligible. So I guess we will have to wait to hear from Mr. Garg on the per unit realization for the male condom business they have got from this order.


(Vilas D'Souza) #946

Price seems to be driving back.
Fy19 feel: topline ~90-95 cr, bottomline ~12-14 cr. PE 12. Market cap target for coming year= 168 cr?.. Just gut feel after absorbing the data points.


(Growth_without Debt) #947

A condom crisis at the centre of the HIV prevention crisis
http://www.unaids.org/en/resources/presscentre/featurestories/2018/july/20180723_condoms-AIDS2018