Cupid Ltd – Helping the world play safe!

Aditya Halwasiya had his first interaction with the analyst and investor community during the Q2 FY24 concall, where he outlined his vision and plan for Cupid going ahead. Some highlights from the call, edited and reorganized for clarity and readability.

1. Why he bought into Cupid – We have been in business for the last 60 years as a Family Group Company, the business we are in is close to maturing, and we feel that the sexual wellness and health and family planning business in India is at its infancy stage still.

2. Capex – Cash on books is close to Rs. 125 Crores, enough to triple our current capacity, including land acquisition, plant & machinery, and human capital. Currently we are at 95 % capacity utilization, so we have very good reason to do so (i.e., increase capacity). We expect our capacity expansion plans to materialize within 16 to 24 months. Going ahead, we would like to have a capacity of more than 1 billion units of male condoms and more than 100 million units of female condoms per annum. For this we will need to add 7 dipping lines (of 70 million units each) which will need Rs.50 to Rs.60 crores and the time will be about 2 years. Current capacity is 50 million of female and 480 million units of male condoms which yields close to Rs.150 crores of revenue.

3. Marketing – With the new capacity additions we would like to enter the international B2C markets using our connects who are already helping us participate in the tenders. This will be done in South American countries as well as South Africa. Simultaneously in India we will also push towards B2C in terms of introducing a few new products along with our existing products to help increase sales. We can give competition to any existing brand in India in female condoms. In addition, we have a team who is working on a very good marketing strategy to introduce our other products like lubricant jellies, male condoms etc. We will be packaging these products together and selling it in the Indian market. We are working on launching a new packaging for our product and new bundling are being worked upon. We will try to make sure Cupid Brand is visible in as many shops as possible in India (where condoms are sold).

4. Growth & margins – I expect at least a 2x growth from there in the coming three years. At the minimum we look to get 15 % to 20 % year-on-year increase in sales. We expect to start expanding by quarter one of FY2025. In quarter two of FY2025 we will start participating in tendering of IVD test kits also. We have EBITDA margins today at 12 % to 13 % for male condoms and for female condoms it is 31 % to 32 % currently. On these EBITDA levels we will be seeing changes of 3 % to 5 %. Overall, our margins will be higher than 20 % on EBIDTA level from next financial year. We expect to end FY24 with a top line of close to Rs. 140 Crores. Using that as a baseline, we will be doubling the revenues and bottomline in 3 to 4 years with a ROC of 20 %.

5. HR – We will be adding many key managerial persons in the C-Suite roster. The current individuals we have hired in the company have built great brands and great distribution lines. Mr. Garg will continue with the new management for at least three years.

6. Housekeeping – We do not want to try and blitz the market in any way because it costs a lot of money to do so. We would like to have a very good number of receivables, good quality receivables going forward. We are doubling down our efforts to improve SOPs in place because we come from a manufacturing background.

7. US foray – Expecting sales from US from beginning of CY 2026. As of today, we sell Maxima brand of female condoms in Tanzania. We will be selling the same brand at a more than double price in the US after we get the US FDA approval because that is the going rate per unit in the US for female condoms. Presently, there is only one qualified manufacturer who has complete monopoly for sale of female condoms in US. The guidance of Rs.300 crore revenue is excluding the US business.

8. IVD Kits – Large export tenders’ business is worth Rs.300 to Rs.400 crores. It can start from 2026 onwards once qualification requirements and regulatory approvals are in place.

9. Contract manufacturing – Discussion with the US company is going relatively well. We are in discussion at the technical level and exchange of information in terms of our manufacturing capacity and capabilities and their marketing requirements are going on.

10. Dividend – We would like to continue with the dividend payout but in the coming years it will be slightly less than what the shareholders have seen over the last 3 to 4 years since we are investing in the business for growth.

(Disc.: Holding)