Sula Vineyards drops 7% to 52-week low as Q2 profit falls 37%

Sula Vineyards' share price fell by 7.44% on Wednesday, November 13, 2024, reaching a new 52-week low of ₹385.35 per share. This decline followed disappointing results for the September quarter (Q2FY25) of the current financial year, leading to concerns among investors regarding the company's performance. The weak financial results have sparked discussions among investors about the potential impact on share market investment.

Key financial performance highlights

Sula Vineyards’ financial performance for Q2FY25 revealed significant declines across key metrics, reflecting the challenges the company faced during the period.

1. Profit decline: Sula's profit fell by 37.3% year-on-year, from ₹23.1 crore in Q2FY24 to ₹14.5 crore in Q2FY25.
2. Revenue dip: The company's revenue (excluding excise) decreased by 1.1% year-on-year to ₹133.1 crore in Q2FY25, compared to ₹134.6 crore in the same quarter last year.
3. Earnings fall: Earnings before interest, tax, depreciation, and amortisation (EBITDA) plummeted by 23.8% year-on-year, from ₹45.1 crore in Q2FY24 to ₹34.4 crore in Q2FY25.
4. Margin squeeze: EBITDA margin contracted by 770 basis points to 25.8% in Q2FY25, down from 33.5% in Q2FY24.

Bright spots in the business

Despite the overall decline, Sula Vineyards saw a 0.4% year-on-year increase in its Own Brands, reaching ₹127.2 crore in Q2FY25. The company's Elite & Premium segment performed well, growing by 7% in Q2FY25. As a result, its share in overall sales reached a record high of 78.5%, compared to 73.5% in the previous year.

Challenges ahead for the winemaker

Sula Vineyards’ CEO, Rajeev Samant, highlighted the company's challenges, particularly a slowdown in consumer demand in urban areas, where 90% of sales are concentrated. Additionally, disruptions in key markets like Karnataka and Delhi further affected performance.

Outlook for the future

Looking ahead, the company remains cautiously optimistic. Sula anticipates a positive festive season, buoyed by the reopening of Andhra Pradesh, the launch of new labels in the CSD market, and the return of the popular SulaFest event at its vineyards in Nashik. 

About Sula Vineyards

Sula Vineyards is a leading Indian winery and a pioneer in wine tourism. Known for its wide range of wine varieties, Sula also offers vineyard tours, wine tastings, and dining experiences. With a strong focus on sustainability, the company adopts eco-friendly practices in its operations.

Key takeaways

1. Sula Vineyards’ share price fell to ₹385.35, marking a 52-week low.
2. The company reported a 37.3% drop in profit for Q2FY25.
3. Despite the challenges, Sula's premium wine segment saw growth.
4. The company is optimistic about future growth, driven by festive demand and new market expansions.

At 11:41 AM, Sula shares were trading at ₹391.60, down 5.94%, while the BSE Sensex was down by 0.58%.