Sula Vineyards soars 10% on heavy volumes post Q3 sales update

The company said it recorded highest-ever quarterly gross billings overall, both for its own brands as well as wine tourism revenues in Q3FY23.

Shares of Sula Vineyards soared 10 per cent to Rs 358.2 on the BSE in Monday’s intra-day trade on the back of heavy volumes after the company said it recorded highest-ever quarterly gross billings overall, both for its own brands as well as wine tourism revenues during October-December quarter (Q3FY23).

The stock of the country’s largest wine producer, with over 50 per cent share in the domestic wine business, traded closer to its 52-week high of Rs 363.40, touched on December 22, 2022.

At 10:25 AM; Sula Vineyards quoted 9.8 per cent higher at Rs 357.45, as compared to 0.26 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped over 10-fold with a combined 2.8 million shares changing hands on the NSE and BSE.

The company had raised Rs 960 crore through initial public offering (IPO) by issuing shares at price of Rs 357 per share. It made its stock market debut on December 22, 2022. Post debut, the stock hit a low of Rs 305.35 on December 26, 2022.

Sula Vineyards said the company witnessed a strong growth of 13 per cent year-on-year (YoY) in the quarter in its own brands gross billings at Rs 187.20 crore, led by strong growth in volumes as well as realisations.

Wine tourism has grown YoY 13 per cent (Rs 23.0 crore) with a 48 per cent (Rs 58.60 crore) improvement in the nine-month period of FY23 over the same period for FY22.

With the company’s new 2.5 million liter cellar up and running in time for the 2023 grape harvest – which is looking excellent in terms of quantity and quality – the company is poised to continue its growth story and leadership in the Indian wine industry, the management said.

Sula Vineyards is India’s largest wine producer and seller (52 per cent market share in FY22). The company produces 56 different labels of wine at four-owned and two-leased production facilities in Maharashtra and Karnataka. Sula has the largest distribution network among wine companies in India ~13000 retail touchpoints in India. The company’s owned brand contribution has been steadily increasing from 63.6 per cent in FY20 to 83.9 per cent in FY22. However, amid worries on an upcoming Covid wave, any imposition of restrictions on travel may prove to be a deterrent for the hospitality sector.

Post pandemic, Sula has shown strong growth on the profitability front from FY22 onwards, which the management expects to stay range bound (due to higher premiumisation and own brands sales). The stock is a pure play on the wine sector, which currently sits on a low base (less than 1 per cent of alcobev industry) but is expected to surpass industry growth due to higher acceptability, affordability, perceived health benefits, etc, analysts at ICICI Securities said in its IPO note.