Investors cheered as the shares of Sula Vineyards zoomed 11.95 percent on Wednesday’s early trades to reach an intraday high of ₹ 386.55 apiece on the National Stock Exchange (NSE) after the company’s sales jumped in the March quarter. At 01:10 PM, the stock was trading 9.84 percent higher at ₹ 386.85 apiece.
Sula Vineyards is India’s largest and only listed wine producer, with more than a 60 percent share in the Elite and Premium wine business. The company in its Q4 & FY23 sales update said that its own brands’ sales volumes crossed 1 million cases, with Elite and premium wines surging past the 5 lakh case mark for the first time.
It recorded its highest-ever annual revenues both for its own brands as well as the wine tourism business. The sales of its own brands increased by 15% to ₹ 104.3 crores and its wine tourism revenue increased by 18% to ₹ 12.4 crores.
Rajeev Samant, CEO of Sula Vineyards said that FY23 has been one of the most momentous and successful years in the company’s 23-year journey. More than 52 percent of the 1 million cases (own brand) were its elite and premium wines including Sula Vineyards, RASA & The Source brands. Moreover, the company conducted more than 1.3 lakh unique individual tastings, indicating a massive growth of 66 percent as compared to the previous year.
Sula Vineyards has played a pivotal role in building the Indian Wine Industry over the past two decades. It established the world’s newest premium wine region of Nashik and also put India on the global wine map. The company has won numerous awards in top global wine competitions including Decanter World Wine Awards and the International Wine Challenge.
With a market capitalization of ₹ 2968 crores, Sula Vineyards is a small-cap stock. It has a return on equity of 14.90 percent and an ideal debt-to-equity ratio of 0.51. Further, it has a price-to-earnings ratio (P/E) of 41.82, which is slightly higher than the industry average of 35.42, indicating that the stock might be overvalued or that investors might be willing to pay a higher price for the company’s future earnings.
Brokerage firm CLSA initiated coverage on the stock and it sees an upside of 22.79 percent in the debutant, with a target price of ₹ 475.00. Sula Vineyards got listed on the bourses in December 2022 and its share price has appreciated to the tune of 17% since then.
CLSA believes that the company is a pioneer in the industry and has strong opportunities, brand recognition and backend capabilities. It is well placed to leverage the global consumer shift towards the low-alcohol beverage segment – beer and wine.
Written by Simran Bafna
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