Sula Vineyards shares up 1.7% as Quant Mutual Fund raises stake to 3.1%

Sula Vineyards shares gained on Thursday as Quant Mutual Fund picked up a 0.66 percent stake in India’s largest wine producer.

Quant Mutual Funds bought an additional 5 lakh shares in the company on June 20, raising its stake to 3.1 percent at an average price of Rs 471 per unit.

The stock was up 1.67 percent at Rs 477.45 at 11.23am on the National Stock Exchange.

“Sula is better off than its domestic peers, and we do not see much change in competitiveness versus imported wines,” Kotak Institutional Equities said in a June 20 report.

The Maharashtra government had in 2009 started a Wine Industry Promotion Scheme (WIPS) for subsidies to promote the industry. Almost 80 percent of Value Added Tax on wine sales is refunded under this subsidy. For Sula, the WIPS subsidy, in the form of the VAT refund, accounted for approximately 28 percent of its earnings before interest, taxes, depreciation, and amortisation (EBITDA) in FY2023, said Kotak Institutional Equities.

Sula Vineyards’ revenue for FY23 increased 21 percent over the previous year to Rs 519.8 crore and net profit jumped 61 percent during the same period. Sula’s operating margin increased 378 basis points to 30.30 percent.

The share price has gained 44.62 percent from the start of the year. It touched a 52-week high of Rs 490 and a 52-week low of Rs 305.

Kotak estimates an average revenue growth rate of 13 percent during FY24-26. The domestic broking firm expects volumes to record a CAGR of 10 percent in own brands. This will be led by premium wine brands.

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