Sula Vineyards IPO - Synonym For Wine In India: ICICI Direct

ICICI Direct's IPO Report

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).

Wine, as a category in India, is expected to grow at 20% compound annual growth rate in (less than 1% of alcobev sector) versus 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). The company has launched seven labels in the prestige and above category in the last five years.

Post pandemic, Sula has shown strong growth on the profitability front from FY22 onwards, which the management expects to stay range bound (due to higher premiumisation and own brands sales).

The stock is a pure play on the wine sector, which currently sits on a low base (less than 1% of alcobev industry) but is expected to surpass industry growth due to higher acceptability, affordability, perceived health benefits, etc.

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