Sula Vineyards IPO Review

Sula Vineyards IPO intends to raise Rs 960 crore. Sula vineyards IPO has fixed a price band of Rs 340-357 a share and will open for subscription from Dec. 12 – Dec. Sula Vineyards has been recognised as the market leader across wine variants, including red, white and sparkling wines. Sula Vineyards IPO is entirely an OFS, with re promoter, Rajeev Samant, and investors Cofintra, Haystack Investments Limited, Saama Capital III Ltd., SWIP Holdings Ltd., Verlinvest S.A and Verlinvest France SA offloading their stake.

  • IPO Date: 12 – 14 December 2022
  • Price band: Rs 340 – Rs 357
  • FV : Rs. 2/-
  • Issue Size: Rs 960 crore (Entirely Offer for Sale)
  • Issue Breakup: QIB 50%, Retail – 35%, NII 15%
  • Bid lot: 42 shares

Anchor Book

Sula Vineyards raised Rs 288 crore from 22 investors, like Dhabi Investment authority, Goldman Sachs, BNP Paribas Arbitrage, Morgan Stanley (Asia), HFC, Aditya Birla, SBI Mutual funds and insurance companies like ICICI Prudential Life Insurance Company, HDFC Life Insurance Company, Aditya Birla Life Insurance Company, Max Life Insurance Company, etc. Top 6 investors are shown below:

  • Incorporated in 2003, Sula Vineyards Limited is India’s largest wine producer and seller as of March 31, 2022. The Company distribute wines under a bouquet of popular brands. In addition to the flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” & “Dia” with its flagship brand “Sula” being the “category creator” of wine in India.
  • Company’s business can be broadly classified under two categories (i) Wine Business: the production of wine, the import of wines and spirits, and the distribution of wines and spirits and (ii) Wine Tourism Business: the sale of services from ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms.
  • The company as of 30 sept, 2022, produced 56 domestic wines labels and imported 21 alcoholic beverage labels from a portfolio of 13 distinct brands at four owned and two leased production facilities located in Maharashtra and Karnataka.
  • As part of its wine tourism business, Sula Vineyards operates two vineyard resorts located at and adjacent to its winery in Nashik, having room capacities of 57 and 10 rooms as of September 30, 2022.
  • The company has one of the largest distribution network amongst the wine companies in India, with ~13,000 retail touchpoints as in 2021.
  • Sula Vineyards had presence in 25 states and 6 union territories. It entered overseas markets in 2003, and currently offer wines in over 20 countries, including Spain, France, Japan, the United Kingdom, and the United States.
  • A major portion, 78% of OFS is by investor Verlinvest who is trimming its 47.3% stake to 21.6%.
  • It has ~2MW installed solar PV capacity which caters to 60% of its annual energy needs in FY22.

Sula Vineyards IPO: Financials

Particulars / (₹ Cr)H1FY23H1FY22FY22FY21Fy20
Revenue from Operations 224.07159.15453.92417.96521.63
Revenue Growth (%) 40.79%– 8.60%-19.87%– 
EBITDA Margin (%)  28.70%18.88%25.57%15.44%9.68%
Profit Before Tax 41.265.6369.543.19-17.4
Net Profit 30.514.5352.143.01-15.94
Net Profit (%) 13.61%2.85%11.49%0.72%-3.06%
Equity Share Capital 16.3215.3815.7215.0815.04
Net worth449.19344.32395.26304.74299.95
EPS – Basic & Diluted (₹) 3.760.66.790.4-2.09
RONW (%)  6.79%1.32%13.19%0.98%-5.23%
Post Issue share Cap16.32
FV in Rs. 2
IPO price357
EPS post IPO FY23  ann7.48
PE 47.7
Market Cap Rs. Cr. 2913
Market Cap/Sales6.5

Peers: Comparison

CompanyFace Value Revenue FY22( ₹ Cr) PE (TTM)RONWMraket cap/sales
Sula Vineyards Ltd 245447.511.45%6.5
United Spirits Ltd 23106260.916.63%6.13
Radico Khaitan Ltd 21247162.413.18%4.72
United Breweries Ltd 11312485.39.29%6.34


  • India’s Contribution of wine in overall alcohol consumption is 1% v/s a world average of 13%.
  • India is one of the fastest growing alcoholic beverage markets in the world.
  • Sula Vineyard enjoys a 50% market share in India’s wine market.
  • Sula Vineyards is market leader across wine variants and plans to launch new products in the elite and premium categories to boost revenue and margins
  • It has gained market share over the years, from 33% in FY2009 to 52% in FY2022 in the 100% grapes wine category.
  • The company reported FY22 revenue of Rs. 454 cr, Out of this Rs. 67 cr. came from wine tourism segment.
  • The company has been successful in consistently raising the prices of their wines by average 6% from FY19 to Fy22.
  • Company’s D2C sales have been growing with Rs 15.75 crore, Rs 7.28 crore and Rs 24.20 crore in the six months ended September 30, 2022, and September 30, 2021, and FY ended March 31, 2022, respectively. This is highest in the wine sector.
  • Sula Vineyards IPO is priced at a post-issue PE of 47x on Post issue Equity. It looks ok on a PE basis compared to peers but on Market Cap/Revenue basis Sula Vineyards IPO is at the upper end or par compared to much larger peers.
  • Compared to peers like United spirits, Radico Khaitan, Sula Vineyards revenues are miniscule.
  • The wine market is expected to grow at a faster rate overall alcohol industry, but much of this is already reflected in the Sula Vineyards IPO price.
  • On the plus side it has the largest wine distribution network , sales presence and enjoys secured supply of raw material with long term contracts bseides being the dominant player and pioneer of the wine tourism business in India.
  • From a longer perspective Sula being the largest producer & seller of wine looks well placed to capture the likely growth opportunities in the Indian wine market.
  • Sula Vineyards IPO is not a very clear cut case though it does have some merits and could be OK for long term. Not sure if I will subscribe to Sula Vineyards IPO. Shall decide on Day 3 only if QIB response is excellent.
  • Listing of Mainboard IPO in last few issues has been rather patchy.
  • Please do your own diligence.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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