Cupid Ltd – Helping the world play safe!

(Ankit Kohli) #1089

A couple of important trends to note from the article:

  • Contraceptive shots emerging as a substitute to female condoms

  • Male condom usage declining

(Dinesh Sairam) #1090

This is an interesting development. The India market is still at a very nascent stages, as far as condom usage in concerned. Nevertheless, this is an interesting bit of trend.

(vchhajed) #1091

Can you elaborate on this? The trends in the article suggest decreasing use.

And what are your views on Cupid currently? With the faulty pieces and order recall, how will it hit the top-line and their brand value as a whole?

(Billu) #1092

Condoms are used more for STD prevention perspective rather than pregnancy avoidance. The ways to avoid pregnancy are far easier to apply and doesn’t hamper sex.

So I don’t think contraceptive methods are gonna affect condom sales.

(Vilas D'Souza) #1093

This link might help although its a year old

My thoughts:

  1. Birth control shots or pills cannot prevent HIV or STDs, they can do a decent job in birth control.
  2. My hunch tells me that shots are more expensive.
  3. The link above mentions that “with a number of adverse health effects, including menstrual irregularities (such as bleeding or spotting), abdominal pain, weight gain, dizziness, headache, nervousness and loss of libido. Apart from this, it is also associated with an elevated risk of breast cancer, and an increased risk of HIV acquisition. The drug’s American manufacturer, Pfizer Inc., has had to place a black box warning on Depo-Provera’s label cautioning about “significant bone mineral density loss”.”

To me, all of the above are serious and irreversible effects. Secondly, when couple have intercourse casually or especially commercially, the risk of HIV/ STDs is always there given commercial intercourse involves multiple partners, ineffective hygiene or improper cleaning of private parts etc.

Pfizer makes birth control shots called Depo-Provera, don’t know who manufacturers in India.

The objective of condoms in Africa is the emphasis of HIV and not the pregnancies related risks.

As for Cupid, as it is the company doesn’t have much exposure in India, it’s more in the B2B side.

Invite more thoughts.

(Dinesh Sairam) #1094

I think Cupid has got a good product and process on their hands. But whether they step up their game plan with regards to finding a good CEO (Someone with a Sales background, preferably) and foray into B2C remains to be seen.

My views regarding the investment prospects remain the same. It it is a “heads I win, tails I don’t lose much” kind of investment.

(vchhajed) #1095

On their concall they mentioned two prospective candidates for the CEO post, but both were uncertain and no clarity on when they’ll get one. How long will the business sustain without the sales opportunities they’ll miss that an experienced CEO can create?

(Growth_without Debt) #1097

(devarshi84) #1098

Why has cupid not entered into the menstural cups business? The raw material required are the same and so is the customerbase.

Would love to hear other investors thoughts.

(devarshi84) #1100

here is the detail on menstural cups. the raw materials and customer base is likely to be the same as male/female condoms. It will complement the sale of female condoms while increasing ROCE and sales.

(Growth_without Debt) #1102

(devarshi84) #1103

Cupid just declared results. Both topline and bottomline are down by 50pct. Also, 9mth results for current year are trailing previous years 9mth results.

Cupid seems to be facing serious issues with capturing govt, institutional and retail orders.

(Growth_without Debt) #1104

Considering govt tender based business, it is expected to have lumpy sales on Q on Q basis. However, we need to evaluate full year performance.

(Dinesh Sairam) #1105

The “poor” results are clearly due to the “drop” in Sales. Margins have held up (Which we should expect anyway). The reason provided is that two large orders had some sort of shipping delay, and hence moved to Q4.

If I’m reading this right, it’s an accounting adjustment. As pointed out by @hnk_so, we should wait for Q4 before judging the overall business (I expect at least a 10% increase in Top line). Meanwhile, we can always look forward to the Concall for more details.

(Vilas D'Souza) #1106

The notes mentions that the impact of the accounting adjustments is not material. The numbers are clearly due to postponement of customer deliveries and that reflects in the inventory adjustment…

Given that almost no institution holds shares, the downside is limited…even the promoter won’t logically sell stake at this stage

(dvdinesh) #1107

Good to know you are still holding… seems like a tough phase after dream run in financial performance (both top and bottomline) until FY18

(CP) #1108

@dineshssairam Admire your ability to deal with and fairly value/quantify uncertainty. As per screener, the Graham Price of Cupid apparently should be 121.19 (not sure if its updated based on Q3). For a company like Cupid known for a lumpy growth pattern, is this a good reference point to use to enter/exit from an investors standpoint? Also, can we assume Graham Price as a good entry point to add more should someone be interested?

Dis: Invested

(devarshi84) #1109

A 50 pct hit due to delayed deliveries is a big deal especially when we are waiting for growth.

They also lost a case against a govt medical agency. A new CEO is still not found. Problems are increasing for Cupid. However, all is not lost and it remains to be seen how Mr. Garg steers the boat.

(Vilas D'Souza) #1110

Any company in this world faces challenges and the first rule in life and business is that things are never linear.

Your points are valid. The comfort is the order book.

The greatest challenge in microcaps is the mortality rate. A good management deserves a higher valuation regardless of growth in my opinion. LEEL and Prabhat are examples before us.

Incase the numbers they publish are true and the balance sheet and ROE are healthy, the price fall is not a concern.

(Dinesh Sairam) #1111

It’s not a “hit”. It’s a delayed order and has been added to the inventory. The note says it will be added back to Q4 Sales, which remains to be seen. In an order based business, it makes no sense to compare QoQ numbers. Only YoY performance and management guidance helps.

The problem about succession is most certainly there. If Mr. Garg manages to appoint someone with a good Sales/Marketing background as the new CEO (As he’s been wanting to for so long now), it will be a big boost. Mr. Garg is too conservative and even recently made a comment about how he’s unwilling to spend on B2C advertisement in India. For Cupid to scale, this needs to change. Cupid needs someone who can steer the marketing activities, as well as a decent capital allocator.

Graham Price is usually a very pessimistic estimate of value. So, yes, I’d say that’s a good starting point if you want a massive Margin of Safety in the stock.