Cupid Ltd – Helping the world play safe!

Notes from Q4 FY23 concall (E&OE):

1. US FDA
   We are gearing up for the new study based on their suggestions. Study will take 9 months from now, and then 3 to 6 months for their approval. Hoping that by this time next year we will have US FDA permission. Expecting sales of USD 1 m. with 50 % net margin (after all the marketing expenses) in the first year.

2. Africa / LATAM
   Expecting more tender orders from Brazil and Tanzania. One Brazil tender to open in later part of June next month. South Africa tender will be in 1st week of June.

3. Export
   Export performance includes govt incentives.

4. Guidance
   Expecting 10 % growth in revenues and profit both in FY24 i.e. minimum Rs.175 crore of which 75 % will be MC and 23 % will be FC and 2 % Others. Thinking about business expansion. Could add MC & FC capacity but not yet decided.

5. Cash utilization
   Capex required for expansion and W/C requirements for IVD operations, so no buyback right now. Will take a final call in the next few months.

6. IVD project
   Expecting revenues of Rs.2.5 crores for FY24 and Rs.5 crore for FY25. WHO approval will take 12 to 15 months, after that big opportunity will open. Large Govt tenders require minimum 3 years’ experience which we do not have currently so we cannot participate. We will complete 3 years in Nov 2024. Breakeven for the project will be after sales over Rs.5 crore. We are convinced this is a good business to be in. Rs.100 crore business can be achieved after FY25.

7. Sale of business
   Negotiations are going on, expect it to be finalized in the next 6 months. Right now, ball is in the investor’s court, we have provided all the information they wanted. They are independent financial investors, not pharma companies. They are interested in buying our entire 45 % stake, I may continue in an advisory capacity for a couple of years. We are expecting Rs.300 per share.

8. Order book
   Current order book Rs.177 crore. Today’s Order cancellation – it was about Lubricant Jelly. There was some deterioration in product quality during transit.

9. RM Prices
   Our main RM is natural rubber latex. All input cost prices are stable or down 5 to 7 %, only rubber is 6 % up from Q1 of last year, it will come down after rains start in Kerala in June. We hold only 2 weeks latex inventory.

10. Market opportunity
    Indian market for MC is large but has only 5 to 7 % margin as it is very competitive. So manufacturers are not making much money. Export market has 20 % margin.

11. Succession planning
    Potential investors will have their own plan and will come with their own management team. We were not able to find a CEO, rest of the internal team like COO etc. is there. Company does not have any other plan, there is no successor from within the promoter family.

(Disc.: Holding)