Sula Vineyards IPO: All You Need To Know
Sula Vinayards will launch its IPO on Dec.12 at a price band of Rs 340-357 apiece.
Sula Vineyards Ltd., the country's largest winemaker, will launch its initial public offering between Dec. 12 and Dec. 14.
The issue consists of an offer for sale of 2.69 crore shares by the promoter group and selling shareholders at a price band of Rs 340–357 apiece in the IPO. The size of issue is Rs 960.3 crore. The promoters and the promoter group will hold 27.3% of the post-offer issued and paid-up equity share capital. The offer for sale comprises 31.95% of the post-offer equity capital in the IPO.
IPO Details
Duration: Dec. 12 to Dec. 14
Offer for sale: 2.69 crore shares.
Price band: Rs 340-357 per share.
Issue size: Offer for sale of Rs 960.30 crore.
Face value: Rs 2 apiece.
Lot size: 42 shares and multiples.
Listing on: BSE and NSE.
Lead managers: Kotak Mahindra Capital Company Ltd., CLSA India Private Ltd., and IIFL Securities Ltd.
Use Of Proceeds
The company will not receive any proceeds from the sale of shares.
Business
Sula is the country's largest wine producer and seller as of March end, being the market leader in the Indian wine industry in terms of sales volume and value—on the basis of the total revenue from operations—since fiscal 2009, crossing 50% market share by value in the domestic market.
It is the market leader across all four price segments. These are ‘Elite,’ i.e., Rs 950+; ‘Premium,’Rs 700-950; ‘Economy,’ Rs 400-700; and ‘Popular, ’below Rs 400. It has a market share of nearly 61% by value in the ‘Elite’ and ‘Premium’ categories in fiscal 2022.
The business is classified into two categories. First there is the production of wine, the import of wines and spirits, and the distribution of wines. The second is spirits and the sale of services from the ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms.
It currently produces 56 different labels of wine at four owned and two leased production facilities located in the Indian states of Maharashtra and Karnataka.
The company services close to 8,000 hotels, restaurants, and caterers, and its off-trade sales contributed 72.25% of secondary sales during fiscal 2022, compared to 61.33%. It has tie-ups with distributors in Maharashtra, Haryana, Delhi, Goa, and Punjab, along with a distribution network with close to 13,000 retail touchpoints across the country in 2021.
Financials
The company is profitable with healthy Ebitda margins.
Peer Competition
It has no listed peers in the Indian market. In the domestic market, it competes with Fratelli Wines and Grovers Zampa.
Risk Factors
The company benefits from high import duties imposed on imports of international wines in India. However,but these duties could be reduced or eliminated in the future, adversely affecting the wine business.
Adverse climatic conditions may impact the quality of wine grapes, which are key raw materials.
Any disruptions in the supply of raw materials could adversely and materially affect business.
The company may not be able to adjust the retail prices of products as a result of state regulation.
Consumers’ taste and preferences may change and they may not prefer wine in the future. Failure to adapt product offerings to changing market trends and consumer tastes, preferences and spending habits could cause sales to decline, and it may not be able to maintain competitive position in the alcoholic beverage and wine industries.
It depends heavily on brand portfolio and the success of business strategy depends on ability to enhance brands.
Revenue from operations is dependent upon a limited number of customers, including state run corporations, wholesalers and independent distributors. Any adverse developments or inability to enter into or maintain such relationships could have an adverse effect business.
Processing units, raw materials and business operations are primarily concentrated in western and south-western parts of India, and any significant social, political, economic or seasonal disruption, or natural calamities or civil disruptions in these regions could have an adverse effect on business.
Watch | Sula Vineyard's Rajveen Samant talks about the company's plans going forward