Company overview
Sula Vineyards Limited was incorporated on 26th February, 2003. Sula
is India’s largest wine producer and seller as of March 31, 2022. The company
has witnessed growth consistently and established itself as the market leader in
the Indian wine industry in terms of sales volume and revenue. Sula is also recognized
as the market leader across wine variants, including red, white and sparkling wines.
Sula’s Shiraz Cabernet is India’s largest selling wine by value in Fiscal
2021. The gross billings of Sula Shiraz Cabernet in FY22 amounted to Rs 91.83 crore.
Company’s business can broadly classified under 2 categories (i) the production,
distribution and imports of wine, and (ii) the sale of services from ownership and
operation of Wine Tourism Business, including vineyard resorts and tasting rooms.
Manufacturing Facilities
Sula produces 56 different labels of wine at 4 owned and 2 leased production facilities
located in the Indian states of Maharashtra and Karnataka.
Location | H1 FY23 | FY22 | FY21 | FY20 | ||||
---|---|---|---|---|---|---|---|---|
Installed capacity | Capacity utilization | Installed capacity | Capacity utilization | Installed capacity | Capacity utilization | Installed capacity | Capacity utilization | |
Maharashtra | ||||||||
Nashik winery | 46.4 | 22.44 | 46.4 | 36.79 | 45.71 | 29 | 45.4 | 27.37 |
Domaine winery | 66.21 | 36.91 | 66.21 | 52.61 | 66.21 | 49.2 | 66.2 | 45.87 |
Leased winery 1 | 9.94 | 5.74 | 9.94 | 8.94 | 9.94 | 7.68 | 9.94 | 6.92 |
York winery (ASPL) | 4.84 | 3.44 | 4.84 | 3.96 | 0 | 0 | 0 | 0 |
Total Maharashtra | 127.39 | 68.54 | 127.39 | 102.29 | 121.85 | 85.9 | 122 | 80.16 |
Karnataka | ||||||||
Domaine sula (DS) | 11.39 | 8.47 | 11.39 | 9.22 | 11.36 | 8.14 | 11.2 | 7.66 |
Leased winery 2 | 6.62 | 4.83 | 6.62 | 3.99 | 6.62 | 3.1 | 6.75 | 2.93 |
Total Karnataka | 18.01 | 13.31 | 18.01 | 13.21 | 17.98 | 11.2 | 18 | 10.59 |
TOTAL | 145.4 | 81.84 | 145.4 | 115.5 | 139.83 | 97.1 | 139 | 90.76 |
Source: Company RHP
Products of the company
Still wine: Wine that is neither sparkling nor fortified. Still
wine constituted 85.38 per cent. of Sula’s total production as of September
30, 2022 under the three main categories~ Elite, premium & economy and popular
category, 15, 22 and 9 labels respectively.
Sparkling wine: Wine that contains bubbles from dissolved carbon dioxide. Sparkling wine constituted 14.62 per cent. of its total production as of September 30, 2022 with 6 and 2 labels under the Elite and Premium & Economy category respectively.
Source: Company RHP
Alcohol consumption | FY22 |
---|---|
Beer | 30% |
Country Liquor | 33% |
IMFL | 36% |
Wine | 1% |
Sula’s Wine Tourism Business
Sula’s wine tourism business is famous for visits at its own developed vineyards
located in Nasik, Maharashtra. The vineyards give tourist an experience of wine
tasting, observing the process of wine making and staycation. The tourism business
of the company has helped the company in its brand strengthening and marketing all
over the world.
Key Operational Parameters of Wine Tourism Business
Parameters | H1 FY23 | FY22 | FY21 | FY20 |
---|---|---|---|---|
Average Rooms Occupancy (%) | 77.37% | 70.97% | 43.66% | 66.48% |
Average Room Revenue (ARR) (in Rs) | 10195 | 10367 | 9044 | 8759 |
Room Revenue | ||||
(A) Room Revenue (in Rs Crores) | 9.5 | 17 | 8.79 | 9.33 |
Room Revenue to Total Income (%) | 4.22% | 3.72% | 2.09% | 1.73% |
Food & Beverage, Merchandise, other Ancillary Services and Wine & Liquor | ||||
(B) Sale of Food & Beverage, merchandise and all other ancillary services (₹ in millions) | 10.27 | 17.6 | 9.34 | 18.8 |
C) Sale of Wine and Liquor (in Rs Crores) | 15.7 | 24.2 | 13.9 | 18.9 |
Total Income (A + B + C) (in Rs Crores) | 35.5 | 58.8 | 32.1 | 47.1 |
Count of Labels
Wine segments | Price range (INR) | Sula Vineyards | Grover Zampa | Fratelli |
---|---|---|---|---|
Elite | 950+ | 21 | 12 | 8 |
Premium | 700-950 | 13 | 13 | 11 |
Economy | 400-700 | 13 | 8 | 4 |
Popular | <400 | 9 | 2 | 3 |
Company Name | Inventory days | Acreage FY22 | Installed Capacity (000 Litre's) |
---|---|---|---|
Sula Vineyards Ltd. | 524.00 | 2521.00 | 13983.00 |
Fratelli Wines | - | 240.00 | 1400.00 |
Grover Zampa Pvt. Ltd. | - | 460.00 | 4700.00 |
Sula Vineyards Limited is the largest producer and seller of wines in India. The company is a pioneer of wine products in domestic market and it is a consistent performer in terms of sales and volumes in wines industry. The firm has gained market share in terms of revenue from operations from 33% in FY 2009 to 52% in FY22. For upcoming years FY22-25 the growth opportunities in domestic wine industry are estimated to increase at a CAGR of 22%. The firm operates in a ‘High Barriers to entry’ industry which gives an added advantage to the company to grow its market share dominantly. At upper band IPO price of Rs 357/ share asking valuation is 52.57x of its FY22 earnings looks reasonable incomparison to other beverage companies with PE valuation of 119.83x and 76.14x of United Breweries Ltd. and United spirits Ltd. respectively.
We recommend ‘SUBSCRIBE’ to the IPO offer for listing gains and long term investments.
Valuation | FY 22 |
---|---|
PE (x) | 52.57 |
Debt/ Equity (x) | 0.58 |
ROE (%) | 11.60% |
ROCE (%) | 18.30% |
Inventory days | 524 |
Cash Conversion Cycle (days) | 347 |
Days Payable Outstanding (days) | 200 |
Net Working Capital Days (days) | 65 |
Use of Proceeds:
The offer is purely an ‘Offer for Sale’ of up to 26,900,530 Equity Shares
by the Selling Shareholders and the company intends to garner Rs 960 cr from this
issue.
Achieve the benefits of listing the Equity Shares on the Stock Exchanges. Since the offer is an ‘Offer for Sale’ the company will not receive any proceeds from the Offer and all such proceeds (net of any Offer related expenses to be borne by the Selling Shareholders) will go to the Selling Shareholders.
Book running lead managers:
Kotak Mahindra Capital Company Limited, CLSA India Private Limited, IIFL Securities
Limite
Management:
Chetan Rameshchandra Desai (Chairman and Non-Executive Independent Director ), Rajeev
Samant (Promoter, Managing Director, Chief Executive Officer)
Particulars | H1 FY23 | FY22 | FY21 | FY20 |
---|---|---|---|---|
Equity share capital | 16.32 | 15.72 | 15.08 | 15.04 |
Reserves | 432.87 | 379.54 | 289.66 | 284.90 |
Net worth | 449.19 | 395.26 | 304.74 | 299.95 |
Revenue from operations | 224.07 | 453.92 | 417.96 | 521.63 |
Revenue growth (%) | 40.79% | 8.60% | -19.87% | - |
EBITDA | 64.31 | 116.07 | 64.51 | 50.49 |
EBITDA margin (%) | 28.70% | 25.57% | 15.44% | 9.68% |
Profit before tax | 41.26 | 69.54 | 3.19 | -17.40 |
Profit after tax (PAT) | 30.51 | 52.14 | 3.01 | -15.94 |
PAT (%) | 13.61% | 11.49% | 0.72% | -3.06% |
EPS- Basic & Diluted | 3.76 | 6.79 | 0.40 | -2.09 |
RNONW (%) | 6.79% | 13.19% | 0.98% | -5.23% |