ICICI Direct IPO report on Sula Vineyards
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.
Valuation and Outlook
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. We assign a rating of SUBSCRIBE with a long term horizon to the IPO as the industry is currently in a nascent stage and demand centres remain concentrated mainly in a few metros.
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