CUPID - Cupid Limited Share Price

Management Outlook & Key Points:

Outlook:

• Q4 FY24 Guidance: Projected revenue of Rs.50-55 crore, with female condom sales expected to rebound to ~Rs.21 crore post-lab equipment resolution in South Africa.
• Capacity Expansion: 3-4 new condom dipping lines planned by end-2024, adding ~300 million male condom units to current 480 million capacity.
• Acquisition Strategy: Raising Rs.385 crore via non-convertible warrants to fund strategic acquisitions (likely condom/IVD manufacturers) for product diversification (non-latex condoms) and faster global approvals.
• US Market Entry: Targeting FDA approval for female condoms by FY26, pending USFDA requirements (e.g., US-based clinical trials).
• Domestic Retail Push: Expanding B2C presence (1,000+ outlets), bundling products (e.g., deodorants), and targeting premiumization.

Major Points:

• Q3 Performance: Revenue rose 16% QoQ to Rs.40 crore; net profit surged 73% QoQ. Female condom sales dropped to Rs.1 crore due to export delays.
• Inventory: Stuck female condom inventory drove stockpile to Rs.23 crore (resolved in Q4).
• Exports Dominance: 89% of Q3 sales were exports (UNFPA, governments); domestic sales (11%) include IVD kits.
• Order Pipeline: Rs.80 crore order book (Rs.30 crore female condoms; Rs.50 crore male condoms) with new tenders expected from Brazil, South Africa, and India.
• Margins: Targeting EBITDA margins >35% and PAT margins >25% via operational efficiency.
• Product Diversification: Exploring polyisoprene/polyurethane condoms (non-latex) via acquisitions to tap premium markets.
• Retail Growth: Focused on northern India; plans to scale distribution post-acquisition funding.

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Question 1:
"My question is regarding the warrants which you have issued to the FIIs around Rs. 385 crores. As you have already highlighted that you don't need any money outside, whatever money which is there in the balance sheet is sufficient for expansion of the new facility. So would like to know exactly what's the purpose of raising this Rs. 385 crores. I mean you would be saying that for future need and all that but I would like to know the exact reason for this. Any acquisition you are planning or anything else?"
Answer:
The funds will partially address working capital needs but primarily finance strategic acquisitions in condoms (polyisoprene/polyurethane variants) and IVDs. The goal is to expand product lines, secure faster regulatory approvals, and enhance manufacturing capabilities. Acquisitions are expected within 18 months, targeting companies with existing infrastructure or approvals.

Question 2:
"What is the current order book of the company and can you please split it out in terms of domestic and international market?"
Answer:
The order book stands at Rs. 80 crores, with 85"“90% from international markets (including female condom orders from South Africa/Brazil and male condoms for UNFPA) and 10"“15% domestic (primarily male condoms and IVD kits). Deliveries are expected over the next 12 months.

Question 3:
"What is your competitor profile for IVD?"
Answer:
Cupid's IVD segment focuses on 8 test kits, including malaria and pregnancy (Cupisure). Clinical trials and CE/WHO certifications for malaria kits are underway, with domestic tender participation expected by mid-2024 and global orders (Africa/Latin America) targeted post-2025 after approvals.

Question 4:
"What is the current order book of the company and can you please split it out in terms of domestic and international market?"
Answer:
The order book stands at Rs. 80 crores, with 85"“90% from international markets (including female condom orders from South Africa/Brazil and male condoms for UNFPA) and 10"“15% domestic (primarily male condoms and IVD kits). Deliveries are expected over the next 12 months.

Question 5:
"Quantified in revenue and profitability terms, what are we expecting from the capacity expansion announced by the company in December?"
Answer:
Post-expansion, Cupid projects revenue of $400 million (Rs.3,200 crores) and EBITDA exceeding $100 million (Rs.800 crores). This includes new condom lines (300 million units added to 480 million existing capacity) and leveraging acquisitions for premium product diversification.