A market leader is a company that has the largest market share in a specific industry. A market leader is a product, brand, company, organization, or group name that has the highest percentage of total sales revenue in a certain market.
Market leaders establish market dominance through various means such as shaping customer loyalty, distribution channels, and pricing strategies. Typically, in a new market, the market leader benefits from being the first mover. Sula Vineyards exemplifieas an example of such a company in the wine production industry.
Sula Vineyards Ltd belongs to the small-cap category with a market capitalization of Rs 4,348 crore. On Friday, company shares were trading at Rs 515.25 a share, a gain of 0.22 percent from the previous close price.
The company’s shares are down by 27 percent from their 52-week high of Rs 699.75 apiece to the current price.
The company saw a 6.3 percent annual revenue increase, rising from Rs 110 crore in Q4FY23 to Rs 117 crore in Q4 FY24. However, net profit experienced a 17 percent decline, dropping from Rs 17 crore to Rs 14 crore. Additionally, the EBITDA margin for FY24 stood at 30.2%, up from 29.1% in FY23.
Sula Vineyards shares have gained 11 percent in the last six months and 13 percent in last year.Sula Vineyards Ltd is a wine producer and seller. The company’s operations are divided into two categories: wine production and the import of wine and spirits.
Sula’s strategy relies heavily on premiumization. In terms of volume and value, premium products now account for 65-70% of the company’s portfolio, up from 50% previously. The company is the Market leader with close to 60 percent market share in the premium wine category.
In terms of the company’s sales, off-trade sales account for 70% of total sales, while on-trade sales account for less than 30%.As of the March quarter, Marquee investor Mukul Mahavir Agrawal holds 20,00,000 equity shares, representing a 2.37 percent stake in the company.
In terms of the company’s sales, off-trade sales account for 70% of total sales, while on-trade sales account for less than 30%.
Currently, the company produces 56 different labels of wine at four owned and two leased production facilities located in the Indian states of Maharashtra and Karnataka. The company has a winery capacity of 16.7 million litres, amongst the top 5 wineries in Asia
CLSA has given a buy rating on Sula Vineyards with a target of Rs 863 per share. The analyst has recommendation based on the increasing middle-class population, rapid expansion of restaurants, and rising incomes, which are expected to drive wine consumption at a Compounded Annual Growth Rate (CAGR) of 15% over the next decade. CLSA anticipates Sula Vineyards to be the primary beneficiary of this trend.
CLSA notes that Maharashtra is Sula’s largest market, accounting for over half of the company’s revenue and 45% to 50% of its volumes. Additionally, Sula is a front runner in wine tourism, a key revenue generator that is also fueling growing interest in wines across the country.
Written by Omkar Chitnis
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