I see that quite a few have wondered why the promoter holding went down in Q4 FY17 but just one or two found this to be red flag.
Here is an overview of the SHP
Promoter holding in Dec '16 was 48.46% and in Mar '17 was 44.87%. During this period Mr. Omprakash Garg transferred almost all his holdings (41.84 lakh shares) to Veena Garg and also sold 4 lakh shares to Elara India Opportunities Fund.
It must not have looked too bad as the shares were transferred to his wife and the other portion was picked up by an institutional investor. However, considering this was done in an euphoric bull market, I suspect the idea was to dispose off this 4 lakh shares at valuations the promoter considered excessive. End of March '17, Cupid was trading at 330.
This is precisely what happened as well because Elara sold 2/3rds in the next quarter and the rest in the quarter after that. This I think is disposal on behalf of the promoter. I know most will see nothing wrong with it, as there is nothing illegal in it. But if this was done by promoter directly through market transactions, it would have raised eyebrows immediately. Doing it this way was the in-thing last year as promoters of several companies, especially microcaps offloaded through similar means on unsuspecting retail.
See how the retail shareholding has moved in this company for eg. from 25% in Dec '15 to 37% in the recent quarter as big fish like Dushyant Poddar and Promoter/Elara offloaded heavy chunks onto them. That is a clear sign of distribution I think.
The company may have a decent business on its hands but it helps to understand what promoters themselves think of their business outside of what they say in interviews and concalls and nothing speaks more than actions like these.