Shares of this Brewery stock under the ‘small-cap’ category jumped approximately 10 percent in Friday’s trading session due to strong growth prospects of the company in the coming years. In the past six months, the company’s stock has gained over 20 percent.
With a market capitalization of Rs 4,648.73 crores, the stocks of Sula Vineyards Limited started their trading session on Friday at Rs 501.50 and currently trade at Rs 550, gaining around 10.50 percent compared to the previous closing levels of Rs 498.10 apiece.
Such sharp movements in the stock prices of the company were observed after Mr. Jagdish Holkar from the All India Wine Producers Association, commented about the wine industry becoming a 5,000 crore industry by 2026. Sula Vineyards gets around 35-40 percent of turnover from Maharashtra itself.
Coming onto the specific policies in Maharashtra, a payment of Rs 70-80 crores of Value Added Tax (VAT) in the state will get around 80 percent of the amount as a refund. Aligning the same with Sula’s majority turnover coming from Maharashtra, the scenario seems favorable for the company.
During the recent financial quarters, the company’s basic business parameters such as operating revenues and after-tax profits showed positive movements with the former increasing from Rs 108 crores during Q1FY23-24 to Rs 133 crores during Q2FY23-24, and, the latter, during the same period, rose from Rs 13 crores to Rs 23 crores.
In addition, the company’s basic profitability ratios such as the return on equity (RoE) as well as return on capital employed (RoCE) showed an increase with the former rising from 14.98 percent during FY21-22 to 18.19 percent during FY22-23 and the latter moving up from 15.03 percent to 20.04 percent.
According to the recent presentations, the company reported an increase in revenue from ‘own brands’ as well as ‘wine tourism’ with the former increasing from 85.4 percent of the revenue mix during H1FY23 to 88.1 percent during H1FY24 and, the latter from 8.8 percent to 9.1 percent.
Sula Vineyards Limited is engaged in the business of producing as well as selling wine under the name of popular brands including Satori, Madera, RASA, and many more. The company’s business is broadly classified under two categories, viz, the production/import of wines & spirits, and the distribution of the same.
Written by Amit Madnani
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