@Rajeev Jawahar
As given in the Press Release with Q 1 results
The product mix is 60% male and 40% female condoms
Also one can see the annual capacity is 400 million pieces male condoms and 15 million peices of female condoms i.e 96.4% and 3.6 %.
does this indicate that the capacity utilisation in male condom category is way underutilised ??? or the male condom category is not growing in a healthy way.
Selling to National Governments or Health organisation is good but one cannot expect sustained long term growth from these segments .
whats your views on acceptability of female condoms among end users.
As its still not popular/ convenient to use female condoms and if given a option a couple will always prefer male condom.
lastly do any one have any idea what kind of other products related to female health the company is planning to launch.
request every one to share their views on the above mentioned points
The BoB report is significant, in that it confirms institutional interest that I spoke about in my last post of July 27. I gather from reliable sources that a few other MF’s / institutions are taking a close look at the Co. Hopefully, at least one should come on board sooner rather than later. Going by the way the stock is moving, may be a few people are more aware of what’s cooking than the rest of us!!
As per the report the order is of Rs.100Cr and total number of condoms to be sold in next 3 years are 54 Million(54 Lakh) so the cost of one condom is coming to Rs.185/- (100cr/54lakh). The price for the same condom available in indian market is 50. Why there is substantial difference? Am I getting this correct?
thanks I got it. But again the second question arises. Considering the calculation the cost of 1 female condom come s to Rs.18.5/- Then can the margins be the survived which are applicable to Rs. 50/- female condom sold in India?
The margins in institutional/govt market will always be lower, and retail market always higher. When institutions buy in bulk they drive hard negotiations for ‘volume discount’. Plus there are higher costs for Cupid on the retail side due to costs for marketing, advertising, brand building, retailer margins etc. so effectively what Cupid pockets is much lower than 50 Rs per condom. This is standard for any company which operates in both institutional and retail markets.
As to whether margins will be sustainable, since Cupid’s current business is largely institutional, and this massive order also falls in the category, it is reasonable to expect margins will sustain. In fact, due to product mix improvement (female vs male condoms) margins might actually go up.
So, Per piece price would be around 23 Rs, which is around 50% of retail price, that is perfectly fine…As in case of retail sale, retail price is Rs 50, but company realisation will be much lower than 50, maybe 20-25% less than the retail price & Bulk order will get lower margin, but it give you visibility of the revenue that is good for such a SMALL company…
My only Concern with Cupid is that Promoter Holding in ~48.5% & if company knows that they have turn around in FY2015 & now they will grow fast then why promoter is not buying his stocks back…Why we dont wants to enjoy then Growth themself or they might be buying in this quarter & Shareholding pattern post Q2 will be interesting…
Disclaimer: Not invested, but looking for the development in Q2 & Q2 results then take a call…
I will be very surprised if the promoters were to increase their stake. The value system of the NRI promoter seems to be different, in that he is not averse to sharing the gains with the minority share holders. Besides, if he had to increase stake, he would have done the same at much lower levels. If he did not do so at Rs. 30, then why at Rs. 200? He knew the developments in the Co. much before they came in public domain.
If Promoter has less than 50% stake, then I dont see any issue increasing their stake, it will give us confidence that they are on the path of LT growth & this is not one off phenomenon…if they dont get any new order after SA 's 100 Cr order then current price seem to be very high & if they are here for LT then why one wants to share more than 50% benefit to public shareholders… Lets see how it goes from here, but I feel after they got SA’s order changed the fortune of company & not when it was 20-30 Rs stock & in highlight it looks very easy to judge that it was waiting to reach at 200 plus levels…Lets wait & Watch…
Lets do simple calculation
FY15 sales were 48.2cr
100cr order for 3 years means 8.33cr per quater starting from Q2
Already Q1 sales are 12.78cr
Now lets workout FY16 sale
FY16= 12.78 × 4 + 8.33 x 3 =76.12cr
An increase of 58% compared to previous year
FY17 = 12.78 × 4 + 8.33 × 4 = 84.44 cr
An increase of 11% over FY16
Profits will be much higher due to product mix + operational leverage
This is present visibility.
And do you people think company can’t get new orders in next 2 years???
Definitely they could because there are only 2 suppliers and cupid is the cheepest supplier. Once a country started distributing female condoms and ones females are used to it then institutions will even increase quantity.
Apart from institutions, domestic is huge market. They are in the process of building brand through online sales. These sales and profits are extra.
Company already starting new product "waters based lubricant " at FDI approved plant. And somany other wellness products are in que at development stage.
Also you can see promoters increased thier stake from much lower levels of some 30 to 49% during 2009 to 2014
Learnt from investment banking circles that the company is up for sale. There have been two serious offers made but the deal fell through for a variety of reasons.
The promoter as has been discussed is very keen to sell and the sale process has been in the works for the last six months. Please keep this in mind when taking a call on investing.
In fact that’s no surprise at all.
It’s an OTC product which has potential to be branded and sold at good price point for a country like India.
This is in addition to the advantages of being one out of only 2 WHO & UNFPA approved FC suppliers.
Promoter as we know is without any family heirs interested to run the business and is old.
So sale is very logical, but hard to put a timeline on it.
It is difficult to comment on rumours going on in informed circles. Even if promoters sell out, there shall be an open offer. If they do not sell and continue with their good work which they are doing for last few years, everything is okay.
Recent BOB report put a target price of 327.
I became positive on the stock after watching the interview posted in this thread before. Either promoters sells it or retain it, its niche space remains intact.
Its seems he is the same Rajeev Jawahar & as Rajeev bought this in Dec-14 quarter, then I feel he might have bought almost 1% stake in company in just 20-25 lacs rs…and its already a 10 bagger for him…I must say its a great Pick Rajeev…You put your money where your mouth is
Yes, that’s me & I had disclosed that I was holding shares while initiating the thread. For the record, I continue to hold my entire quantity as of today & plan to exit with the promoter, whenever that happens, hopefully sooner than later!, But who knows, tomorrow is another day & one is always tempted to encash gains…
