Cupid Ltd – Helping the world play safe!

(Rudresh) #1046

Since fortnight r so, company is pushing ads about female comdom religiously once in a week. Looks like B2C is catching up. Things vl take time 2 think, crystallize n implement. Lets see 6 months down d line, how this change in strategy is working out.

(Vilas D'Souza) #1047

The topline runrate is only 21 cr approx per quarter.

By the way anyone living in Telangana? We can meet

(nitin.verma) #1048

Does it seem Cupid has opted out of the joint venture?

(Vilas D'Souza) #1049

It’s obvious, what is there to “seem”?

The following are required to happen in my opinion:

  1. Mr. Garg should sell out to a strategic partner and remain on board as a mentor given his age, physical challenges and no family succession. Shareholders should demand a timeline.
  2. Fresh young blood, dynamic CEO, CBDO and well connected directors to be installed.
  3. Tap fiis and mfs by issuing more capital and expand capacity. The addressable opportunities are huge in this business.
  4. Alternatively get acquired by a bigger shark. Mr. Garg is mostly in the US where he can scout for a strategic buyer like the one that edged out Cupid in the tender this time.

My analysis was mistaken. I assumed that the 100 odd crores order is the beginning of a new growth trajectery. Mr. Garg had mentioned that 20% cagr will be there for several quarters. Plus the balance sheet was good, PE wasn’t that high. At that point, it was a buy. But Basant Maheshwari exited. Clearly second level thinking which I couldn’t then see.

Any thoughts?

We as shareholders should individually write to push for the above to enhance market value. Else at this rate, the company deserves a market cap of ~150 crores {(14 cr earning power x 8 PE for zero growth but good npm and roe) plus 28 crores for the balance sheet ( this is a random number from me to round off market cap)}.

(RICHAJ) #1050

Not too sure about the amount of ‘second level’ thinking here. In hindsight (and even otherwise) it was clear when this stock moved from ‘value’ to ‘growth’. Even on this forum, it seems that several people exited after Cupid’s initial growth spurt on the basis of a lack of clarity about future growth. On other forums too, questions about future growth and lack of promotor ambition have been key sticking points.

I for one grossly underestimated the execution risk when I bought in mid-2017, thinking that new product launches would quickly pick up. I ignored the thought that the ‘old’ promoter might have just had enough action for one life time already.

I agree that we shareholders need to organise and send a message to management, but the key question is: will they listen? If Yes Bank can find a CEO in 3 months, something is clearly wrong with Cupid for it to have taken 1+ years.

(Vilas D'Souza) #1051
  1. Old age isn’t the issue, how old are Buffett n Munger… Physical challenges and succession are.
  2. Order book grows with time. It isn’t that lack of orders prompted exits by the gurus. In b2b, orders flow in with time and mainly connections more than quality. U think African tender is based on quality? That too government order?
  3. I think the gurus saw then, what is worrying me today.
  4. The relevant question is: how do we avoid such pitalls in future?

I bought at 190 odd levels cum bonus taking that as a fair value. But it seems to me that 190 too is a premium price.

Shareholders should ask and write tough questions respecting this management with integrity. Whether they listen or not is another issue

(Vilas D'Souza) #1052

Of the 51 crores, 40 crores is executable from October 2018 to sep 2019, the most awaited order. So fy19 share of the 51 crores is 31 crores only

(Dinesh Sairam) #1053

The first tranche of 40 Cr worth of Condoms to SA is executable within the running Financial Year, if I’m not wrong. Do correct me if I am.

(Vilas D'Souza) #1054

No, I recall it’s Oct 2018 to sep 2019. I assumed equally distributed between the two halves, but may be a little different.

(mrai74) #1055

Hope following clarifies the doubt

(Subbu) #1056

i think management have a lot of explaining to do in tomorrow’s con call as the SA JV was the main project and with that gone the whole equation changes completely. B2C is a long road with a lot of cash burn. I fail to understand what is the point of all this expansion if you don’t have orders to fill. Not sure whats next now.

(Vilas D'Souza) #1057

I hope investor put lot of pressure on the management to appoint a new CEO and to do better business.

(yesudeep) #1058

I kind of don’t like this idea at all. I’d prefer a level-headed CEO who knows what he/she is doing.
“Fresh young blood, dynamic” are precisely the exciting things CEOs shouldn’t have.

(Vilas D'Souza) #1059

The current ceo is level headed and knows what he’s doing.

A dynamic ceo is needed to take things to a new level…Mukesh Ambani is a dynamic ceo.
Level headedness is a quality.

(Hardik) #1060

Cupid Q2FY19 Concall:

As per Earnings Release, Cupid has decided not to be an equity partner with J V partner.

The product mix for Q2FY19 (Female:Male:Lubricant) has changed to 50:50 from 60:36:4 which has clearly hurt the margins.

Tenders from SA Brazil India Tanzania Zambia

  1. SA 3 year contract is completed on 30th Sep.

  2. Expansion from 400 mn to 560 mn pcs. First line by Dec and second line by March. Expect to increase topline and reduce production cost.

  3. JV with South African local partner:
    Will not be an equity partner. Instead, cupid will supply semi-finished goods and provide technical assistance in setting up and running a plant. 5% royalty payment. This is a better alternate and less riskier than being a minority partner.

  4. Cupid FC registered in Brazil and participated in 30 mn tender. Results expected by Dec.

  5. Participated in MC tender to supply 70 mn pcs to Govt of Tanzania. Results in next few days.

  6. Order book: Confirmed order of Rs.51 cr. MC-FC (2:1) to be despatched by Mar 2019. Expect to receive more orders in next 6 months. Capacity utilisation in quarter was over 90% for both MC and FC. Includes 15 Cr of SA govt.

  7. Large scale tenders are floated due to more funding from donors (WHO, World Bank). Additional capacities will help to participate and margins will be better.

  8. Positive for next 3-5 years.


  1. SA JV:
    Will be technical partner instead of equity partner. Expect Rs.4-5 Cr. p.a. revenue over next 3 years without any investment.
    JV partner may be able to gain technical expertise and hence repeat order may not come.
    Expect one more tender from SA. From JV govt expects to purchase 16 mn FC (Oct. 2019), 24mn in 2nd year, 32mn in 3rd year, 40 mn in 4th year.
    Reason for low allocation in first tender as govt expects to give order to local JV partner.

  2. Brazil Tender details:
    30 mn pcs. (FCF) - 30 cents / pcs. - 9 mn USD. This is for 1 year. Already talking about large qty for next year.
    Expect it to be allotted to one party.

  3. CEO:
    Had 2 prospects in last qtr. Could not negotiate salary with one. Second is overseas and not sure when will it materialise.

  4. Tanzania: 70 mn. Pcs MC Value - 16 Cr. - to be delivered in 4 months. Results to be out in next few days.

  5. Retail: Promoting brand through wholesales / dealers / distributors and digital marketing. Sale in H1 is less than 2 Cr. By March, expect sales to be Rs.4 Cr. by Mar 19. EBITDA margin ~25% on B2C sales. MRP for 3 pcs MC is Rs.25.

  6. USFDA:
    Not received final notification from USFDA. Expect it by Dec. Initiated a contact with Marketing company in california to retail cupid condoms in US. Hoping to receive revenues from Q1FY20.
    Retail price for FC in US is $1.5 - $2. Earlier they have marketed competitor’s product.

  • Cupid will submit technical documents within 2 months
  • Clinical trials - 2 months (possible that no trials required)
  1. Expect 20-30% revenue share from non-condom products in next 3-5 years.

  2. Targeting 10-15% increase in topline for next 3-5 years. Total production capacity has increased. Coming out with value added products. Cost of production will be lower.

  3. New products in pipeline - wipe to stop premature ejaculation. 2nd generation FC - attachment to condom for more pleasure.

  4. Other income represents exchange benefit.

  5. Raw Material prices: Currently enjoying lowest prices for latex. Silicon pricing - were suffering due to high costs. Prices have come down by ~ 25% in last 3 weeks. Looks favorable now.

  6. Guidance for FY19 - 90-95 Cr. Topline. ~20 Cr. PAT.

(Subbu) #1061

thanks Hardik. Very good summary.

In terms of analysis, I think th skew ismore towards male condoms and female condoms are sort of struggling. The only positive I see is if the company wins the tender in brazil which is fairly large at $9 million. Given that its a 1 year order, $9 million translates to 63 crores so if Cupid wins this the stock could shoot up. the US FDA is the next major step and if Cupid can even manage to get a 10 - 15% share of the US market which is large as well as lucrative. Only issue is that this is at least a 12 - 18 month time frame. I don’t think revenues in April - June 2019 qtr is possible from the US market. Too tight.

In summary, the company is still dependent on tenders which is a binary event, so if people can stomach the uncertainty and lumpy nature of revenue then I think things could turn out positive in the next 24 months, but the risk is significant.

(Hardik) #1062

Yes, this year they may do 90 Cr. topline but contribution from MC will be more and hence margins will be depressed.

I was excited about Brazil tender until Mr.Garg mentioned that it may be allotted to one single company. It would be amazing if Cupid gets the entire order. But if they do not qualify as L1 then it would have been nice to get atleast a part of it. This tender is important.

I was also surprised on the timeline for US market. It looks too optimistic to start getting revenues from Q1FY20. Mr.Garg did not factor timeline for any qualification / re-trials by USFDA. Also, after the approval, the speed at which Cupid and US marketing company can make product available in retail is important.

(AbhijitMani) #1063

Well,the Tanzanian order of 16 crs just got announced.
This should be of some consolation in the short term :grinning:

(Vilas D'Souza) #1064

Some more key takeaways:

  1. The 51 crore order book mentioned is for FY19 only. That gives fair revenue visibility for 2019.

  2. They’re working on selling other products.

  3. Demand is robust out there.

(Hardik) #1065

This is good news. Given that this is required to be executed in 4 months, this should add to the already projected topline of Rs.51 Cr. for H2FY19.