Shares of India’s largest wine producer and seller tanked 7.4 percent on Wednesday’s early trades to reach an intraday low of ₹ 478.05 apiece on the National Stock Exchange (NSE) after it received an excise duty notice for ₹ 115.90 crore from the Maharashtra Excise Department. At 12:14 PM, its shares were trading at ₹ 481.35 apiece.
The notice dated July 31, 2023, was passed by the Minister of State Excise Revenue. This came after the minister vacated the interim stay granted on the demand notice issued by the Nashik collector for the recovery of excise duty from Sula Vineyards.
This notice was received on the ground that excise duty was recoverable on wine produced or manufactured from grapes produced in Maharashtra by blending wine brought from across the custom frontier or from other states, as per the Maharashtra Manufactured Beer and Wine Rules, 1966.
Sula Vineyards in an exchange filing stated that the order does not affect the existing business or the activities of the company, as it has strived to conduct its business in compliance with extant laws and regulations in letter and spirit.
The company said that it immediately filed a petition on August 01, 2023, before the High Court of Bombay, challenging the order. The company said that it was legally advised that the demand notice is not tenable in law.
Sula Vineyards manufactures and distributes wines under Sula- its flagship brand, and other popular brands like RASA, Dindori, The Source, Satori, Madera & Dia.
With a market capitalization of ₹ 4,357 crores, Sula Vineyards is a small-cap company. It has a high return on equity of 18.12 percent and an ideal debt-to-equity ratio of 0.38. Its shares were trading at a price-to-earnings ratio (P/E) of 50.42, which is higher than the industry P/E of 31.61, indicating that the stock might be overvalued as compared to its peers.
Retail investors hold a 55.72 percent stake in it followed by promoters with 27.27 percent, mutual funds with 8.97 percent, foreign institutions with 6.78 percent and other domestic institutions with 1.26 percent.
Written by Simran Bafna
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