Sula Vineyards IPO opens today: GMP, analyst views, price band, allotment, listing date & more

The Rs 960.35-crore IPO by Sula Vineyards, India’s largest wine producer and seller, will open for public subscription today. Ahead of the IPO, the company finalised allocation of 8,070,158 shares to anchor investors at Rs 357 a piece, aggregating Rs 288.10 crore. The IPO is an offer for sale (OFS) of 2.69 crore shares to be sold in the Rs 340-357 price band.

Last heard, the IPO was commanding a grey market premium (GMP) of Rs 34 apiece, which suggests prospects of single-digit listing gains.

"At the issue price of Rs 340-357, the stock is trading at 51.3 times/53.8 times its FY2022 earnings, which is at discount to the large peers. The discount to peers could be justified by risk related to high concentration of buyers and state government grants on VAT contribute to a large part of its profitability. Consequently, the scope for handsome listing gains is limited as of now. However, investors could look at the stock in case of weakness post its listing," Sharekhan said

Sula Vineyards is the market leader across all four price segments (Elite, premium, economy and popular) and also the market leader across all the wine variants namely red, white and sparkling wines. Sula's company’s business is broadly classified under two categories wine production, the import of wines and spirits, and the distribution of wines and spirits and sale of services from ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms.

"Considering the lower wine penetration in the domestic market and expanding demographic factors like rising per capita income and expanding target population, we believe the domestic wine market is on the cusp of exponential growth. Sula being the largest producer & seller of wine is well placed to capture the future growth opportunities in the Indian wine market. Thus we assign a subscribe rating to the issue," said Choice Broking in a note.

Anand Rathi said Sula Vineyards IPO is asking for a P/E 35.8 times and market cap of Rs 3,005.80 crore post issue of equity shares and return on net worth of 11.45 per cent. It believes Sula Vineyards IPO is fairly priced and recommended a “Subscribe- Long Term” rating to the IPO.

The IPO will conclude on December 14, the basis of allotment will likely be finalised by December 19 and the listing of Sula Vineyards shares are likely by December 22.

At present, Sula produces 56 different labels of wine at four owned and two leased production facilities located in Maharashtra and Karnataka. The company has entered into long-term supply arrangements (of up to 12 years) with grape growers for 2,290 acres as of September 30. The company also distributes wines under a bouquet of popular brands including 'RASA,' 'Dindori', 'The Source,' 'Satori', 'Madera' & 'Dia' with its flagship brand 'Sula' being the category creator of wine in India.

Also Read: Wine maker Sula Vineyards to launch IPO on December 12