Pending FTA agreement with Europe can bring the import duties down heavily. Along with the reduced tax benefit in Maharashtra, can Sula maintain its edge in Urban areas still?
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What are your thoughts, if the foreign brands are allowed with less import tariff. With EU having some better brands.
Would that be a impact for sales of Sula?
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I think so no maybe because sale of liquor in India (Pan-India) is a complex task which only handful of companies can execute due to complexity of supply chain and different distrbution model required for each of the states. However they might disrupt in some of the low hanging markets for short term so it depends on the time horizon and how willing they are to invest.
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Key updates:
- Sula’s share price is trading around Rs 305 in May 2025 at a PE of 36x, having corrected -55% from the All time high it reached in Jan 2024.
- FY25 has been a year of no growth for Sula in terms of revenue, there was slight volume de-growth too in the last 2 quarters of FY25.
I will list down the growth drivers and risk factors in Sula Vineyards Ltd:
Growth drivers:
- Wine is only ~1% (Rs 1500 Crs) of the total Alcobev market, so there is under penetration of wine
- Shifting consumer preferences from hard liquor to wine, especially urban women
- Premiumization of the portfolio by Sula (more than 70% share from Premium and Elite category)
- Leading brand in wine category with strong brand awareness and recall, commanding a 45% market share in the industry
- Capacity expansion: increasing tank capacity and adding a resort with conference facilities in Nashik
Risk factors:
- Low growth: There has been no volume growth in FY25, mgmt. blaming macro factors like decrease in urban spending
- Top Level management changes: Except the founder, most of the top management including the CFO, COO and the Chief Winemaker has changed in the last 3 years. There has also been some changes in BOD
- Low Promoter Stake: Promoter stake at 24.66%, which decreased from 27.27% in June 2023
Increase in total debt and working capital due to slow FY25 - Regulatory risk: VAT refund from Maharashtra govt mostly gets delayed and may not get renewed affecting margins
- Rs 100 crores excise demand notice in litigation
Disc: Not Invested
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Can you share the source? I cannot locate Rs 100 Cr Excise Demand Notice in FY25 Annual Report.
Amit
I am concerned about the debt in the balance sheet.
As per Sep’25 screener info, They have 301 crs short term debt (increasing trend over quarters) and 68 crs long term debt and hardly making 50 crs annual net profits.
Additionally, they have only 21 crs as cash equivalents which I am not sure is enough to cover working capital.
If this goes on, the negative spiral will never end and it would be slow death. As they taking additional short term death to cover working capital and the additional interest is depleting their net profit.
I also feel they are taking debt to give dividends as well previously. Not sure y?
Can anyone help me if I am looking it in a right direction or not. Thanks in advance.
Disclaimer: once invested; exited with losses. Yet, still intrested in business and tracking.
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