IPO Review - Sula Vineyards Ltd - ICICI Direct

Sula Vineyards is India's largest wine producer and seller (52% market share in FY22). The company produces 56 different labels of wine at four owned and two leased production facilities in Maharashtra and Karnataka. Sula has the largest distribution network among wine companies in India (~13000 retail touchpoints in India).

- On-trade, off-trade, D2C contributed 73%, 23%, 4%, respectively, in FY22 net revenues

- Own brands, third party brands, wine tourism, others contributed 84%, 8%, 8%, 1%, respectively, in FY22 net revenues

Key triggers / Highlights

- Wine, as a category in India, is expected to grow at 20% CAGR in value (less than 1% of alcobev sector) vs. 12% for the overall alcobev sector. Sula commands 52% share in the 100% grape wine segment (which itself is ~85% of the overall wine segment)

- Own brands focus from FY20 onwards is accounting for 84% in H1FY23, helping achieve better profitability

- Premiumisation of brands: Overall P&A brands contributed 71% to revenues from own brands in H1FY23. The company has launched seven labels in the P&A category in the last five years

- Secure raw material supply: Sula has access to ~2521 acres of vineyards, significantly higher than the second largest wine company in the Indian market at close to 460 acres

- High barriers to entry

For details, click on the link below: Link to the report

Source : Equity Bulls

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