SULA Vineyards –

Q1 FY 25 results and concall highlights –

Sales – 129 vs 118 cr, up 9 pc ( extreme heat wave and general elections were strong headwinds )

Gross margins – 76 vs 74 cr

EBITDA – 35 vs 32 cr, up 9 pc ( margins @ 27 vs 27 pc )

PAT – 15 vs 14 cr, up 6 pc

Revenue split –

Own brands – 115 cr , up 12 pc

Within own brands – Elite and Premium categories contributed to 71 pc of sales ( @ 82 cr ) vs 74 pc in Q1 FY 24. This portfolio grew by 8 pc – led by price growth. Volume growth was (-) 1 pc

Sale of Economy and Popular brands jumped by 24 pc to 33 cr. It has happened after >2 yrs that economy and popular portfolio has grown faster than elite and premium segments

Wine tourism – 11 cr, down 2 pc. New tasting room and restaurant operationalised near Nahsik Airport

Sale of imported brands – 4 cr

Two exiting projects under construction –

Launching new tasting room and wine shop ( 3500 Sq Ft ) at ND Wines ( acquired in Apr 24 ) – near Gujarat Border

Expansion of Wine Tourism facilities at ‘Domaine Sula’ – near Bengaluru

Expecting both these initiatives to go commercial before the festive season

Company’s key brands –

RASA – Elite brand
The SOURCE – Elite brand
SULA – Premium brand
DINDORI – Premium brand
MADERA – Economy brand
DIA – Economy brand
YORK – Popular brand
ARROS – Popular brand

Company has installed 3 MW solar power capacity at its manufacturing sites catering to 50+ of their energy needs

There were very heavy restrictions on the movement of alcoholic beverages during the General Elections – which had an adverse impact on company’s Q1 performance. This also led to distributor level de-stocking

CSD sales grew by 50 pc in Q1

THE SOURCE – brand grew by 20 pc in Q1

Economy and Popular brand sales have been outsourced to third party players ( in Karnataka, Telangana, Maharashtra ). Company wants to focus on Elite and Premium segments. This outsourcing is also yielding good results – evident from the growth in economy and popular segments in Q1

Their Wine Tourism resort occupancy has started to improve nicely in July – Aug vs Q1

A new resort is going to come up in FY 26 – expanding the company’s resort capacity by 30 pc. This facility will also have a conference room ( was absent in their existing resort )

WIPS outstanding balance ( subsidy from Maharashtra govt ) on 31 Mar was 73 cr after receiving 89 cr from Maharashtra govt in Q4. Another 21 cr have accrued in Q1, taking the total balance to 94 cr as on 30 Jun. Now the company has received another 10 cr from the Maharashtra Govt, reducing the WIPS balance to 84 cr

30 pc company’s sales come from HORECA segment ( which company calls on trade sales ). 70 pc come from normal sales from Wine Shops

Pernod Ricard is in talks to sell off their Wines business to Accolade Wines UK by end of FY 25. This is going to be a very positive development for Sula. This is because, Pernod Ricard used to bundle the sales of their Wines – Jacob’s Creek ( no 2 in India ) with their Whisky brands. Sula always used to find it difficult to compete with such a strategy

Will monitor / look out for sales pick up before adding to my positions

Disc: hold a small tracking position, not SEBI registered, biased, not a buy/sell recommendation