Cupid limited- Analysing the business

Cupid is one who induces love in the soul, but the kind of cupid which we are about to see is a little late to work, but works wonders. Cupid limited has been in the business of producing condoms for more than two decades where the early days weren’t better than a few years back. The contract manufacturer sustained the industry competition when bigger players were expanding rapidly. Since the fund allocated to marketing and advertising was NIL for so long years, they remain undisclosed. Even though the economics of the business is worthwhile, How Cupid is making use of this rising demand?

Economic Analysis:

The global condom market is expected to breach 15.1 USD by the year 2026 exhibiting a CAGR of 8.5% from 2019. It is forecasted that female condom would flourish at a CAGR of 20% during the period of 2018-24. As we all know the success story of Gillette conquering the world. The Gillette’s model of “Use and throw that, again buy”, is same as in this industry too but Gillette was the first mover. Increasing count of AIDS, and other unfamiliar STDs, STIs feed the industry consistently. WHO & other global organization distributes pieces for free exchanging for a cost from contract manufacturers. Obviously, no one here is marrying with population data in concern. In 2018 a study divulged, that condom is the most preferred method of contraceptive after IUD insertion.

The Government of India had been decreasing the funding on improvising sexual health since 2008 due to the reduced manufacturing cost of oral pills. Until 2015 Nirodh condoms were popular among Indians, which is run by HLL Lifecare owned by the government as a Union government company having captured 17%.

Industry Analysis:

The industry is dominated locally by Mankind Pharma, which produces the famous Man Force condoms. The ad shoot with the stellar, Sunny Leone helped them maintain a market share of 32% in 2020. JK Ansell, being the second largest competitor produces the iconic KamaSutra followed by UK based Reckitt whose advertising stands as the epitome, Durex & Skore enjoys 7% of the market. Cupid is way down to the 10th position which will be clearly justified. The condom manufacturing and pharma companies barely juxtapose because of the lower revenue they generate and condoms hardly move to produce drugs due to immense R/D investment which condom companies scarcely do for them. It’s difficult to showcase variants in condoms as most of the people are creative with their sex life and half way is exposed.

How did cupid cleverly place it’s business in this arena?

Business Analysis:

Founded in 1993 as Cupid condom limited and to Cupid limited in 2006. The contract manufacturers who concentrate mostly on B2B sells in bulk to institutions. The company produces Male condoms (MC), Female condoms (FC), Lubricant Jelly, Creams and pleasure adders, the overall portfolio is limited to these 4 products and trying to expand towards manufacturing medical kits for pervasive diseases. Recently, Hand sanitizer has been added. The order book is steadily increasing year on year, adding countries for exporting condoms mainly female which has a high profit margin.

How cupid is unique is, the country, even the world has fewer manufacturers of FCs and low cost manufacturers are even lesser. As far as Cupid is concerned the competitive pricing holds them in second in the global space. The revenues are inconsistently increasing from 2014. Cupid doubled its revenue in FY20 with a profit margin increase of 2.6 times. Cupid increased its variety of MCs in the year 2019 to attract the global market.

Order book:

During the FY2020 Cupid started exporting FCs to Brazil and MCs to Tanzania and South Africa. The revenue flows in with products selling over 80 countries and continuing to explore boundaries. There prevailed an uncertainty about the orders placed in 2017 which was cleared out in further performances of 2019,2020. Cupid the foresaw the saturation ahead and started early to expand the export portfolio to a large number of countries.

From the annual report of FY 2020

Since the corona virus shook stable economies the government spending on sexual health products have decreased for the FY21 and continue to be low until the pandemic ceases to exist. Since men are more aware of the MC the units under production and orders are always higher than the FCs.

The mass of the book for the current year is INR 166 Cr which is almost same as the previous year. Due to corona virus the revenue is affected more or less the results will be around the previous number. The profit for the year may chance, according to the margin which is will stay at the same level or increase.

(Personal forecast).


The clean promoter Mr. Omprakash Garg is 77 years old with high expertise in this field holds 45.06% of the company. The family is indulged in running the business Having his spouse as a Non-Executive director Mrs. Veena Garg and brother Mr. Suresh Chand Garg as a board member.

In an interview conducted 3 years back, the firm is working on improving profit margin and growth rate of the company, that did happen in the following years. The promoter expects the business would grow at 13% to 15% in the period of 2020-2025. He stressed on margin several times, that will stay within 20%-30% window.

Annual Report of FY 20


Cupid tried for so many years to penetrate the local retail market in India, which they progressed sacrificing the profit margin which the business is most concerned about. Well known is male condoms than the female contraceptives, Indian women are not aware of such products. In the early years of 2000s Cupid figured out retail ground was not their play. They prefer B2B than focusing on B2C which made them not to spend for advertisements. Online presence and direct sales contributed a meager amount of 15,000 units. Altogether worked to improve the profit margin. Female condoms are the bedrock of the business which yields more than the MCs.

  • Male condoms sell for INR 2 with a margin of 10%-15%,
  • Female condoms sell more than INR 22 with a margin of 20% to 30%.

Since they work under contracts, the loss is almost nil apart from operational mistakes.

Competitive pricing is still keeping them alive in scooping up institutional orders. FC is a market of less competition, which gives them the flexibility and the power of pricing. As a part of their strategy, they have decided not to incur huge expenditure in building a brand through advertisements and instead sell the branded products through the wholesalers spread across major cities in the country.

The joint venture partner, Invex looks up for orders and marketing the products take up 50% of the profits from the company. “The main reason that we have entered into this agreement because of the expertise and experience of our partners in marketing, and their contacts with the major buyers. So when the tenders will come out, what would be the size of the tenders, what are they looking for, all such intelligence gathering, resulting in the final orders for Cupid is the main contribution our partner would be making“- Om Prakash Garg.


  • The revenues are from the native currencies i.e., Dollars, that exposes them to currency risk.
  • Receivables which are increasing year on year and doubled last year, subjected to credit risk.
  • The promoter’s age is about 77, legion of investors cannot bid on the promoter even though the company is taken care by many.

Financial Analysis:

  • Market Capitalization: 305.44 Cr
  • A company with zero debt, borrows at times to compensate the working capital.
  • The dividend is consistent and increasing Y-O-Y by 23.7% from 2012 and the board hasn’t objected for future payments.
  • Inventories are going hand in hand with the revenues.
  • Return on equity is 38.5% of the FY 2020.
  • Revenue had been increased by 87.2% and the net profit increased by 161.7%.
  • The profit margin remained above 24% from the FY 2016.
  • The most comforting fact is the Mutual fund holding is NIL. Retail Investors are making up the remaining stake.
  • The PE of the stock is in single digit (7.6).
  • The EPS improved from INR 0.6 to INR 39.84 from 2012 to the present year.
Dividend History

Threats treated:

  • Receivables has been decreased to 24 Cr from 31 Cr which was earlier a problem of credit risk.
  • The management is in search of a new CEO with expertise in the same field for 15 years or more which will be helpful in initiating business in the USA.
  • Not as often Cupid borrows against its FD to compensate the working capital. In every annual report, the debt has never increased from zero.

Future growth prospects:

Cupid has planned to step into the USA market with 4 brands including Angel FC, that has been delayed due to the pandemic and the management remains optimistic about the test results going on in South Africa. Since their products surpassed several tests in 50+ countries the US FDA approval would be a cake walk. The marketing would be aggressive after the deal approval.

After setting up an in-house Research and Development team, they have figured out the medical kit manufacturing has immense demand in India and fewer players are struggling to fulfil demands. The margin is 20%-30% and the initial investment has been made. Milan is the company with which Cupid has joined hands for manufacturing and no details were specified on what kind of agreement. This branch out has been forecasted to flourish for 5-7 years without a demand drop and yields a revenue of INR 30 Cr.

As a part of the expansion, the board conformed to buy 40% of Seloi Health Care Private limited for INR 50 lakhs.

The man who knows the business:

Mr. Om Prakash Garg replied to a question from an investor about the stock price which moved no where and recommended him on a buy back.

Yes, we have been considering that. And we would continue to look at that. Normally, our concentration is on managing the business and making the profits out of the business, and not paying too much attention to the day-to-day fluctuations in terms of Cupid share price. However, we would consider your suggestion about buying back shares.

Can I buy:

Starting to buy after the confirmation of the US deal is advisable, that might trigger a price hike. As the results are no lesser than the previous year, the annual report may disclose whether the management is proactive or reactive against the pandemic disruption.

Play safe or bear the risk.

For both investing and sex life.


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