Sula Vineyards, India’s largest-selling winemaker, has grown into a prominent player in the Indian wine industry and has caught the eye of many investors, given its consistent performance and robust business model.
Sula’s winery and vineyard are based in the Nashik region of western India, about 180 km northeast of Mumbai. Founded in 1999, Sula Vineyards has emerged as India's largest and most awarded wine brand. The company has been a trailblazer in introducing grape varietals such as Chenin blanc, Sauvignon blanc, Riesling, and Zinfandel in India, making it a leading player in the Indian wine industry.
Sula Vineyards History
Sula Vineyards was founded in 1999 by Stanford University alumnus Rajeev Samant, who sought to introduce wine culture in India and leveraged his family’s land in Nashik to realise this dream. The vineyard was named “Sula” as a tribute to his mother, “Sulabha”. Over the years, Sula has expanded its offerings and introduced new grape varieties to the Indian market.
Samant was introduced to Sula wines during his early years studying at Stanford University and working at Oracle in California. After spending three months at a small winery in California, Rajeev established Sula Vineyards, after which several other wineries in India followed suit over the next decade.
When Was Sula Vineyards IPO?
Sula Vineyards’ IPO was launched on December 12, 2022 and the company was listed on December 22, 2022. The company raised ₹960 crore from its public offer at an issue price of ₹357 per share. the stock listed slightly higher at ₹361 apiece on the National Stock Exchange (NSE).
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However, the IPO was entirely an offer for sale and investors were concerned about the low promoter shareholding. Sula Vineyards’ share price ended the first trading session at ₹329.90, down 7.6% from its listing price.
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Sula Vineyards Share Price: Is It Time To Buy?
Sula Vineyards share price stood at ₹491.85 on the NSE at the close of trading on September 1, which means Sula Vineyards’ NSE share price has risen 37.8% over its IPO issue price.
Sula’s share price had closed at a peak of of ₹521.75 on July 31.
There are several unique and important factors to consider before buying Sula Vineyards shares. Making informed investment decisions requires careful evaluation and analysis. Here are some key points to keep in mind:
Sula Vineyards’ Financial Health
Sula Vineyards has been profitable since before its IPO and has been profitable ever since as well. In its most recent results for the quarter ended March 2023, the company posted a net profit of ₹13.7 crore, which is greater than the year-ago figure of ₹11 crore, but slightly lower than the ₹14.2 crore Sula Vineyards earned in the preceding quarter ended March 2023.
|Operating Profit Margin%||27.97%||27.22%||24.30%||26.89%|
Sula Vineyards shares are currently trading at a price-to-earnings (PE) ratio of 49.15, which is slightly higher than the overall sector PE of around 46.60. This implies that Sula Vineyards’ share price has little to no upside potential in terms of valuation. On the other hand, Sula Vineyards’ price-to-book (PB) ratio stands at 7.76, which is much lower than the sector PB ratio of 9.45.
Sula Vineyards shares had a return on equity of 15.80% for the year ended March 2023.
Analyst Calls For Sula Vineyards
Analysts at brokerage firm Hem Securites has in August given Sula a “buy” rating and set a 12-month target of ₹587 for Sula Vineyards share price, which implies a potential upside of 19.34% from Sula Vineyards’ share price as of September 1.
The brokerage said that Sula Vineyards’ With the wine industry growing with good pace, the company is on strong footing the ride the wave as the wine market in India is expected to grow at a compound annual growth rate of 20%-25%.
Keynote Capital also gave the stock the same rating of “buy” and the exact same target price of ₹587, saying the company’s wine consumption will likely grow at 15% volume and 4% price in FY24, and it will maintain its market leadership, and further empower its moat.
Sula Vineyards Market Share
The Indian alcoholic beverage market is the third-largest in the world and was estimated to worth be around ₹4.08 lakh crore in 2023. However, the wine market was calculated to be ₹1,352.99 crore in 2022. Still, the segment has a large growth opportunity in India and is expected to grow at a compound annual growth rate of 18.9% during 2023-2028.
Sula Vineyards’ market share was over 52% in the pure grape wine segment.
“Sula Vineyards is well placed to leverage the global consumer shift towards the low-alcohol beverage segment – beer and wine,” CSLA had said in its note.
Sula Vineyards Business Model
Sula Vineyards business model can be broadly classified under two categories:
- the production of wine, the import of wines and spirits, and the distribution of wines and spirits
- the sale of services from ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms
Sula wines price points vary to make them accessible for consumers with different budgets. Sula wines has 56 labels to choose from a portfolio of 13 distinct brands as of March 31, 2022. Sula wine prices range between ₹235 to ₹1,850 per 750 ml bottle in Maharashtra.
Sula Vineyards services close to 8,000 hotels, restaurants and caterers and has tie-ups with distributors in Maharashtra, Haryana, Delhi, Goa and Punjab. Sula Vineyards has the largest distribution network among wine companies in India, with close to 13,000 retail touchpoints across the country in 2021.
The company also sells through a direct to consumer sales channel primarily through its Wine Tourism Business facilities in Nashik and Bengaluru, with the highest number of D2C sales in the Indian wine industry in fiscal 2021.
Who Owns Sula Wines Vineyards
Sula Vineyards’ low promoter ownership has been a cause for concern for investors since its IPO, which was entirely an offer for share. As of June 9, Sula Vineyards founder Rajeev Samant owns 26.04% of the company, while his wife, Mia Samant, owns 1.29%.
Among other shareholders, Verlinvest Asia holds the largest percentage of shares at 18.68%. SBI Consumption Opportunities Fund, HDFC Small Cap Fund and Aditya Birla Sun Life Trustee Private Limited hold between 3.30% and 1.06% of Sula Vineyards’ shares.
Ace investor Mukul Agrawal also holds 2.38% in Sula Vineyards.
Sula Vineyards Competitors
While Sula Wines shares the spotlight with several other competitors in the market, it was one of the first winemakers to blaze the trail in the Indian market. These include Big Banyan Wines, Century Wines, Charosa Wineries, Deccan Plateau Vineyards, Fratelli Wines, Good Drop Wine Cellars, Grover Zampa Vineyards, Nira Valley Grape Wines, Pernod Ricard SA and Vallonne Vineyards. However, there aren’t many listed wine companies in India.
Sula Vineyards does, however, face stiff competition in the broader alcoholic beverage category from listed rivals. Here are some shares you might consider buying in place of Sula:
- United Spirits: Owned by UK-based Diageo, United Spirits is India’s biggest alcoholic beverage company and the world’s second-largest spirits company by volume. It owns well-known brands such as McDowell’s No.1, Antiquity, Bagpiper, Royal Challenge, and Black Dog. In wines, it is known for the Four Seasons label
- United Breweries: Owned by Heineken, United Breweries controls 60% of the total manufacturing capacity for beer in India. It markets beers under the Kingfisher brand and was once controlled by fugitive businessman Vijay Mallya.
- Radico Khaitan: This Uttar Pradesh-based firm manufacturers industrial alcohol, Indian made foreign liquor, country liquor and fertilisers. It is best known for its Vodka label Magic Moments.
Which Are The Main Sula Vineyards Products?
Sula Vineyards offers a rich portfolio of over 56 variants of wine. They are mainly divided into four labels, based on the type of wine and the production process categories:
- Sula Classics: This includes Sula wines such as the Sula Brut, Sula Brut Tropicale, Sula Sparkling Shiraz, Sula Seco, Sula Seco Rosé, Sula Zinfandel Rosé, Sula Sauvignon Blanc, Sula Chenin Blanc, Sula Chenin Blanc Reserve, Sula Riesling, Sula Late Harvest Chenin Blanc, Sula Shiraz Cabernet, Sula Zinfandel, Sula Satori.
- Rāsā: This includes Sula wines such as Rāsā Cabernet Sauvignon, Rāsā Syrah, Rāsā Zinfandel.
- The Source: This includes wines such as The Source Grenache Rosé, The Source Sauvignon Blanc Reserve, The Source Cabernet Sauvignon.
- Dindori Reserve: This includes wines such as Dindori Reserve Viognier, Dindori Reserve Chardonnay, Dindori Reserve Shiraz.
Sula Wines also sells products under the wine labels Satori, Madera and Dia.
All information in this article is provided for general informational purposes only and should not be construed as financial advice or a recommendation to invest in Sula Vineyards shares. Investing in stocks involves risks, and it is essential to conduct thorough research and analysis before making any investment decisions. It is recommended that you consult with a qualified financial advisor or conduct your own research to evaluate the suitability of investing in Sula Vineyards shares.
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