To be sure, the microcap stock has been a multibagger, almost quadrupling investor wealth since its relisting in December. Following an almost unidirectional rally that lasted about 3 months, Cupid’s share price has dropped off its February highs.
But the company’s ₹1,800 crore expansion plan, despite it clocking less than ₹1 crore in revenue for 2024-25, has rekindled investor interest. Following the stock exchange announcement on 26 June, the counter appreciated by more than 15% in barely a week. With multibagger returns, the company’s market-cap is now approaching ₹600 crore.
Cupid’s plans
Cupid Breweries and Distilleries was formerly known as Cupid Trades and Finance. Established in 1985 and headquartered in Mumbai, the company used to provide securities brokerage and commission services. It was only in late 2024 that the company changed its name to be representative of its primary source of revenue—alcoholic beverages.
Following a change in management, Cupid is set to double down on its alcohol business. Based on its disclosure to the stock exchanges, the company plans on investing ₹1,800 crore towards capacity expansion. This would scale up Cupid’s production capacity to 175 million litres of spirits, 180 million litres of beer, and 7 million litres of craft beer.
Outside of India, Cupid is also present in West Asia. Its capacity expansion through contract bottlers would help expand its footprint further. While all these seem like good news, a close look into the company’s financials raises questions.
Financials cast doubt
Cupid reported operating revenue of nearly ₹58 lakh for 2024-25. In its exchange filing, the company didn’t provide revenue for FY24. But income from operations in the fourth quarter (January-March 2025) declined to about ₹12 lakh from nearly ₹26 lakh in the preceding three months.
Worryingly, Cupid has been posting losses year after year, its annual reports show. In FY25, the company’s loss expanded to about ₹50 lakh from a loss of nearly ₹9 lakh in FY24.
Also, the company’s operations have been bleeding cash for years. Its operating cash flows have accelerated in recent years. It is only with intermittent inflows from investing and financing activities that Cupid has been able to barely maintain a positive cash balance.
Cupid’s lifeline
Given Cupid’s financial performance, securing funds for its ambitious expansion plan remains a big question mark. The company is already struggling with debt of about ₹7 crore.
But a solution to Cupid’s problem likely lies in the new management. A loan agreement signed with the company’s directors had turned overdue. This resulted in conversion of the debt to equity, and management control being handed over to the directors. The new management was inducted in October 2023.
This is to say that while Cupid’s original promoters have no stake in it, Cupid’s directors—Venkatachalam Prasad Erramilli, Bhagvandas Lily Rodrigues, and Subha Lalita Samavedam—together own 56.5% of the company.
This could prove to be the lifeline Cupid needs. As per disclosures made by the company, Erramilli and Rodrigues had a combined net worth amounting to more than ₹444 crore. While the company is exploring funding options for its ₹1,800 crore expansion, loans could be obtained directly or indirectly on the back of the directors’ financial might.
The company’s authorized share capital has been increased from ₹1 crore to ₹63 crore, making it easier to secure bank loans. The directors can give loans to the company, or provide personal guarantees for the bank loans. Furthermore, following the recent share price rally, a pledge of the directors’ shares to raise funds is a viable option.
In response to Mint’s emailed queries, a spokesperson for Cupid said the company was “continuously evaluating various financing options to support its business growth through preferential issue” of shares. On whether there were plans to pledge the directors’ shares, the spokesperson replied: “So far there are no such occurrence…”.
“The directors have personally infused funds and provided financial support to bring the company to its current stage of progress. This commitment continues,” the spokesperson added. “Moreover, the company’s asset-backed revenue-generating business model boosts its balance sheet strength, which will help the company for its future financial commitment and increased participation.”
Acquisitions and other plans
Cupid has opted to expand through acquisitions. After acquiring a 11% stake in Martin Judds Microbreweries Pvt. Ltd in February, Cupid announced the acquisition of Crochet Industries Pvt. Ltd for ₹300 crore in April. Both the acquisitions were made through share-swap deals, sidestepping the need for cash infusion.
Cupid has also acquired industrial land in Uzbekistan, indicating expansion plans in the country. It also recently emerged as a shortlisted buyer for the distress sale of SDF Industries Ltd.
Cupid has also entered into an agreement with Germany-based Steinecker GmbH for the purchase of technology and equipment for its greenfield factory in Ras Al-Khaimah, UAE. The factory would produce Halal-certified non-alcoholic beer. Cupid has also reported plans to set up a manufacturing facility at Sikkim and a new marketing office at Bengaluru.
Red flags raise concerns
The Indian alcoholic beverage market is estimated at $200 billion. With rapid urbanization, rising disposable incomes, and continued premiumization, the industry is slated to grow to $300 billion over the next decade. But it is fraught with regulatory risk affecting even large and deep-pocketed companies.
Adding to this, Cupid has seen back-to-back resignations of two chief financial officers in under a year—Subhash Kanojiya in September followed by Naresh Tadikonda in May. In December, an independent director resigned. On their resignations, Cupid’s spokesperson said the core management team continued to remain with the company.
Cupid also recently changed its auditor and repeatedly delayed annual general meetings and filing regulatory disclosures. Last year, BSE directed a forensic audit on the company and the stock was suspended from trading due to non-compliance with certain regulations.
Cupid’s management has committed to improve the company’s financial controls. The forensic audit has concluded and the stock suspension has been revoked.
“The delay for conducting AGM for the financial year ended March 31, 2023 was due to old management, however after induction of new management in Oct 2023, as a part of regularizing the Company’s Compliances, the AGM for the financial year ended March 2023 was conducted on 09.02.2024, other than that there are no delays in AGM of the Company,” Cupid’s spokesperson said in the company’s email response to Mint’s queries.
However, unusual movements in Cupid’s stock have caught the attention of the Securities and Exchange Board of India, which has categorized it under Stage 0 of the Graded Surveillance Measure.
It is important to note that these are indicators of poor governance, not proof. Moreover, some of the indicators in the case of Cupid can be attributed to churn associated with the change in ownership. But multiple such indicators lighting up in such a short span of time warrant caution.
Cupid’s spokesperson said the company had undergone a “strategic transformation” post re-listing on 3 December and the acquisition of manufacturing units and brands between February and June.
Following the induction of the current Management in October 2023, “Cupid Breweries has complied with all statutory and regulatory obligations, including submissions/filings, honouring various financial commitments, having shareholders meetings wherever necessary, including change of name to its current form” reflecting the company’s current direction and ambition, the spokesperson said.
Ananya Roy is the founder of Credibull Capital, a Sebi-registered investment adviser. X: @ananyaroycfa
Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
