Cheers! Sula Vineyards jumps 11% on strong business update

Sula Vineyards

Shares of Sula Vineyards jumped as much as 10.69 per cent to Rs 389.75 apiece on the BSE in the opening trade on April 12. The stock witnessed a steep increase as the wine producer on Tuesday said sales volume from its own brands crossed 1 million cases in FY23. Besides, sales volumes in elite & premium wines went past the 5 lakh cases mark for the first time, the company informed in its business update.

The Company, the regulatory filing added, has recorded its highest ever annual revenues both for its own brands as well as the wine tourism business. "The company witnessed a strong nearly 15 per cent growth YoY Q4FY23 for its own brands. Wine tourism grew by nearly 18 per cent YoY Q4FY23 with a nearly 30 per cent jump in FY23 over FY22," the statement said.

Sula Vineyards shares were listed on the bourses on December 22 last year, wherein the company had made a muted debut. The stock was listed at Rs 361 against the issue price of Rs 357. The initial public offering of Sula Vineyards was subscribed 2.33 times during December 12-14, 2022.

The stock hit an all-time high of Rs 432 on January 23, 2023, while its all-time low level of Rs 305.55 was touched on December 26, 2022.

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Commenting on the strong business update, Rajeev Samant, CEO, said, “FY23 has been one of the most momentous and successful years in Sula’s 23-year journey. Our focus on premiumisation is reaping rich dividends - more than 52 per cent of 1 million cases are our Elite & Premium wines including our Sula Vineyards, RASA & The Source brands. That share was just 46 per cent in pre-pandemic FY19. We continue our laser-like focus on our highly profitable own brands, and at the same time prune the imported brands business." 

Samant noted that the tribe of Indian wine drinkers is growing and they are reaching for more premium wines and increasingly those are Sula’s brands.

In a pre-IPO note, analysts at ICICI Securities had said that post-pandemic, Sula has shown strong growth on the profitability front from FY22 onwards and that the stock is a pure play on the wine sector, which currently sits on a low base (less than 1% of alcobev industry) but is expected to surpass industry growth due to higher acceptability, affordability, perceived health benefits, etc. 

"We assign a rating of SUBSCRIBE with a long-term horizon to the IPO as the industry is currently in a nascent stage and demand centres remain concentrated mainly in a few metros," Bharat Chhoda, research analyst at ICICI Securities, had written in a report dated December 11, 2022. The report was co-authored by Harshal Mehta, another research analyst at the brokerage.