I don’t come from a background where wine was ever on the table. But over time, like many of us, I watched Sula Vineyards sneak its way into dinner conversations, rooftop parties, and eventually, portfolios.
Let me tell you something I didn’t expect when I started digging into Sula Vineyards.
This company is best known for making India drink its first glass of wine- is a lot more complex (and interesting) than I gave it credit for.
So when the stock corrected more than 50% from its peak, I didn’t rush to conclusions. I opened the investor deck, read the earnings call transcript line by line, and just tried to understand one thing:
Is this the beginning of the end… or just a hangover from a good run?
👉 If this wasn’t a stock- would I still respect the business?
And here’s what I found.
From First Sip to First Mover
Sula isn’t just India’s leading wine brand, it is the Indian wine category.
They started in 1996, when most people in this country didn’t know the difference between Shiraz and sugarcane. And they didn’t just build a product; they built an entire ecosystem—vineyards, resorts, tasting rooms, music festivals.
They made wine… fun. Relatable. Something you didn’t have to be rich or foreign to enjoy.
Today, Sula sells over 60% of all premium wines in India. They’ve got 25,000+ points of sale. Exports. Two gorgeous resorts in Nashik. And they’ve somehow managed to turn grape juice into a ₹600+ Cr revenue business.
So far, so good, right?
And yet… the market has lost interest. Why?
The Q3FY25 Hangover
Let’s talk numbers:
EBITDA down 26% YoY
PAT down 35%
Margins dropped from 33.5% to 24.8%
On the surface, it looked bad. But when I zoomed in, I found one of the real culprits was this:
❌ A subsidy cap.
Sula gets benefits under a Maharashtra government scheme (WIPS). But in Q3, their main unit hit its ₹20 Cr annual limit. Boom—₹4.7 Cr gone from the books.
That alone caused a 200 bps drop in margins.
And they’ve already fixed it—a new bottling unit in Nashik went live in Jan’25. From FY26 onward, they’ll get 100% subsidy eligibility again.
The Silent Issue: Receivables
Another stress point was government liquor corporations (like Telangana) delaying payments.
Sula had ~₹90 Cr stuck in receivables at one point.
DSOs went up by 30 days.
Management says this is improving, and they’re consciously reducing exposure to slow-paying state entities.
But Look at the Wine Tourism Engine
While core financials dipped, the tourism vertical quietly crushed it.
ARRs crossed ₹10.5K.
Occupancy rose to 81%.
And revenue hit an all-time high for Q3.
Tourism isn’t a side business anymore. It’s a brand-building machine that also prints money.
And with a 30-room new resort and expanded tasting rooms coming up in FY26, this could scale further.
Some Quirky, Under-the-Radar Facts
Here are some wild things most people don’t know:
1. Sula Was First to Launch Wine-in-a-Can
At SulaFest 2025, their canned wines outsold bottles.
Chenin Blanc, Zinfandel Rosé, Red Zin,all in chilled, ready-to-drink cans.
It was bold. It worked.
2. Most-Visited Vineyard in the World
At one point, Sula clocked 3.5 lakh+ annual footfalls—more than even big names in Napa or Bordeaux.
Why? Because they combined wine, tourism, music, weddings, and hospitality—all in one destination.
3. ESG Isn’t Just a Buzzword
- 59% of energy from solar
- Plans to install 2 MW battery storage
- Over 50 million litres of water recycled
- First Indian wine company with IWCA Gold (climate action)
Valuation Reset: What the Numbers Are Whispering?
Right now, Sula trades at:
- P/E: ~34x
- PEG: ~1.18 (based on 22% forward earnings growth)
- ROCE: 18.8%
- Debt/EBITDA: ~2.3x (comfortable)
What this tells me: the valuation has reset to a level where the business no longer feels frothy—but also not bargain-basement cheap.
In other words:
The market is saying, “Show me the margins again, and I’ll rerate you.”
What the Subsidy Hit Really Looked Like
This is how hard the WIPS cap hurt them in Q3:
That ₹4.7 Cr loss won’t repeat in FY26, which makes this dip more of a glitch than a trend.
Shikshan Nivesh Insight
This isn’t a dying brand. It’s a high-quality business having a rough quarter.
What I like:
- Premium wines still growing
- Wine tourism printing record numbers
- Management clear & transparent
- Optionality in D2C, canned wine, events, tourism
What I’m watching:
- Urban demand recovery
- Execution of new resort + WIPS subsidy
- Receivable cycle in government corp markets
Would I invest? That’s up to your own risk appetite.
But what I can say is this:
Sula isn’t a company I’d write off after one or two bad quarters.
It’s a business that built a market from scratch.
And that for me still counts for something.
Sources
- Q3FY25 Investor Presentation- Financials, ARR, tourism metrics
- Q3FY25 Concall Transcript- WIPS impact, receivables, wine-in-a-can insights
- FY24 Annual Report- EPS, ROCE, revenue mix, sustainability data
- Screener.in- Consolidated financials cross-check
- NSE Data- Historical stock prices for PEG calculation
- CRISIL Report (Jan 2025)- Business & credit outlook
- Management Guidance- Forward growth estimate (~22%)
- Research & insights by Shikshan Nivesh
- Charts/images created by Shikshan Nivesh using company-reported financials
Disclaimer: This article is for informational purposes only. It is not investment advice. Please do your own research or speak with a financial advisor before making any investment decisions.
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