Sula Vineyards Limited IPO Details
Sula Vineyards Limited is the India’s largest wine producer and seller as of March 31, 2022 was incorporated in 2003. The largest wine producer and retailer in India, Sula Vineyards has consistently outperformed the competition in terms of sales and volume in the industry it serves. It is also the vineyard that receives the most visitors; in 2020, it received about 368,000 visitors. ‘Elite’ (INR 950+), ‘Premium’ (INR 700-950), ‘Economy’ (INR 400-700), and ‘Popular’ (INR 400) are the market leaders in each of these four price ranges. Additionally, it dominates the market for all types of wines, including red, white, and sparkling wines. In the Indian states of Maharashtra and Karnataka, the company currently employs four owned and two leased production facilities to produce 56 different wine labels.
The business falls into two primary categories:
- the making of wine, importing of wines and spirits, and selling of wines and spirits (together, the “Wine Business”).
- the selling of services post purchase
Vineyard resorts and tasting rooms are a recent addition to the business of wine tourism. The tasting room known as “Domaine Sula” is situated in Karnataka, while the resorts with the brand names “The Source at Sula” and “Beyond by Sula,” with respective room capacities of 57 and 10, are situated in Nasik. The biggest wine music festival in Asia and India is also held there.
In addition to its flagship brand, Sula, the company also sells wine under the names RASA, Dindori, The Source, Satori, Madera, and Dia. The company must provide a wide range of wines at different price points, with 56 labels to pick from in a portfolio of 13 different brands, making it affordable for people of all income levels.
It provides services to about 8000 hotels, eateries, and caterers, and over the past three years, off-trade sales have contributed up to 72.25% of its secondary sales. With up to 13,000 retail touchpoints in 2021, the company has agreements with distributors in Maharashtra, Haryana, Delhi, Goa, and Punjab.
Objective of the Issue
It is proposed that the Fresh Issue’s net proceeds be used as follows:
- For the purpose of executing the Offer for Sale up to 26,900,530 Equity Shares
- To benefit from the equity shares’ listing on the stock exchange.
| Sula Vineyards Limited IPO | Details |
|---|---|
| Price Band | ₹ 340 to ₹ 357 per share |
| Face Value | ₹ 2 per share |
| Issue Size | 960.35 Crs |
| Opening Date | 12 Dec 2022 |
| Closing Date | 14 Dec 2022 |
| Allotment | 19 Dec 2022 |
| Initiation of Funds | 20 Dec 2022 |
| Credit to Demat | 21 Dec 2022 |
| Listing Date | 22 Dec 2022 |
| Pre Issue Share Holding | 28.44% |
| Post Issue Share Holding | 27.33% |
| 1 lot | 42 Shares |
| Retail Quota | 35% |
| QIB Quota | 50% |
| NII Quota | 15% |
| Retail (Min) | 1 Lot (42 Shares) |
| Retail (Max) | 13 Lots (546 Shares) |
| S-HNI (Min) | 14 Lots (588 Shares) |
| B-HNI (Min) | 67 Lots (2814 Shares) |
| Promoters | Rajeev Samant |
| Draft Red Herring Prospectus | DRHP |
| Red Herring Prospectus | RHP |
| Grey Market Premium | Click Here |
| Allotment Status | Check Here |
The biggest wine producer in India, Sula Vineyards, is launching an initial public offering (IPO) that will take place from December 12, 10:00 AM to December 14, 5:00 P.M. UPI Mandate confirmation must be received by 5 PM on the day the issue closes.
EBITDA & PAT (in Crs)
EBITDA– Earnings Before Interest Tax Depreciation & Amortization PAT – Profit After Tax
Total Assets, Share Capital and Borrowings (in Crs)
Revenue Growth (in Crs)
Peer Comparison
| Particulars | Sula Vineyards Limited | United Spirits Limited | Radico Khaitan Limited | United Breweries Limited |
|---|---|---|---|---|
| Face Value | 2 | 2 | 2 | 1 |
| EPS | 6.53 | 11.68 | 19.70 | 13.82 |
| PE | 54.67 (taking 357 as the listing price) | 76.14 | 53.36 | 119.83 |
| RoNW% | 11.45 | 16.63 | 13.18 | 9.29 |
| Revenue from Operations (in ₹ Crs) | 453.91 | 31,061.80 | 12,470.50 | 13,123.92 |
| EBITDA Margin (%) | 25.57 | 4.76 | 3.28 | 5.54 |
| PAT Margin (%) | 11.49 | 2.61 | 2.11 | 2.79 |
| Debt to Earnings Ratio | 1.97 | 0.23 | 0.46 | 0.00 |
Analysis:
If we analyse the financial parameters of Sula Vineyards Limited, then it can be clearly seen that the firm is on the growth path with both EBITDA and PAT increasing on year to year basis. Total assets of the company are almost constant in the past 3 years but its borrowings are continuously decreasing on YOY bais. This firm’s revenue growth declined in FY21 and then again increased to 454 crores in FY22 from 418 crores in FY21.
Taking the EPS as 6.53 as per RHP till March 2022, PE ratio comes around 54.67 taking 357 as the price of the share. PE ratio of 54.67 is on the lower side in comparison to the peer companies. This simply depicts that the IPO is reasonably priced though we cannot take any decision without considering other fundamental parameters.
RoNW of 11.45%, which is just above United Breweries & EBITDA margin of 25.57% which is best among its peer companies. But if you compare its own profit, it is continously increasing on YoY basis with the best Pat Margin among its peer companies. Increased profits accompanied with the decreasing borrowings is seen in the last 3 years. If we check the the PAT in the last six months from April – Sep 2022, it has already touched 30.51 crores against profit of 52.14 crores in the last FY. This depicts that the company is on the growth path.
After looking all the financial parameters, it is observed that the journey of Sula Vineyards had ups and downs. However, the company is performing good in terms of profits and earnings. So, long term investors can go ahead with this IPO. For short term, only those who can take risk can apply. In order to realize the listing gains, investors can observe the response of the HNI investors & can apply for this IPO on the third day after checking the grey market premium.