Sula Vineyards Limited
Please refer to important disclosures at the end of this report
1
Incorporated in 2003, Sula Vineyards Limited is the India's largest wine producer and
seller as of March 31, 2022. The company also distribute 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. The
company's business is broadly classified under two categories (i) The production of
wine, the import of wines and spirits, and the distribution of wines and spirits (the
"Wine Business"); and (ii) The sale of services from ownership and operation of wine
tourism venues, including vineyard resorts and tasting rooms (the "Wine Tourism
Business").
Positives: (a) Experienced board and qualified senior management (b) Secured supply
of raw materials with long term contracts exclusive to Sula (c) Established market leader
in the Indian Wine industry with the leading brand “Sula” combined with leader and
pioneer of wine tourism business in India
Investment concerns: (a) Company benefits from high import duties imposed on
imports of international wines in India, these duties could be reduced or eliminated in
the future. (b) Adverse climatic conditions may impact the quality of wine grapes which
is the key raw material. (c) Company may not be able to adjust the retail prices of its
products as a result of state regulation.
Outlook & Valuation: In terms of valuations, the post-issue P/E works out to 52.5x
FY22 EPS (at the upper end of the issue price band) which is less than its indirect peers
like United Spirits, United Breweries Ltd and Radico Khaitan Ltd. Further, SVL has a
niche offering which peers don’t have much expertise in. However, its financials are
not much attractive at this juncture considering 10% yoy growth in net sales and along
with the fact that it has recently turned profitable. Considering all the factors, we
believe this valuation is at reasonable levels. Thus, we recommend a NEUTRAL rating
on the issue.
Key Financials
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Net Sales
485
386
424
% chg
-20%
10%
Net Profit
-16
3
52
% chg
1610%
EBITDA (%)
49
61
113
EPS (Rs)
-2
0.4
6.4
P/E (x)
-
960.3
55.5
P/BV (x)
9.6
9.5
7.3
ROE (%)
-5.3
1.0
13.2
ROCE (%)
2
5.7
14.1
EV/Sales
6.7
8.2
7.3
Source: Company RHP, Angel Research
NEUTRAL
Issue Open: December 12, 2022
Issue Close: December 14, 2022
Offer for Sale: ` 960cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 27.3%
Public 72.7%
Present Eq. Paid up Capital: ` 15.72cr
Fresh issue: ` 0cr
Post Eq. Paid up Capital: ` 15.72cr
Issue size (amount): ₹ 960cr
Price Band: ₹340 - ₹357
Lot Size: 42 shares and in multiple thereafter
Post-issue mkt. cap: *₹2,863cr - ** ₹3,006cr
Post Issue Shareholding Pattern
Promoters holding Pre-Issue: 28.44%
Promoters holding Post-Issue: 27.33%
*Calculated on lower price band
** Calculated on upper price band
Book Building
IPO NOTE
Sula Vineyards Limited
December 9, 2022
Sula Vineyards Limited| IPO Note
December 9, 2022
2
Company background
Incorporated in 2003, Sula Vineyards Limited is the India's largest wine producer
and seller as of March 31, 2022. The company also distribute 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. The company's business is broadly classified under two categories (i) the
production of wine, the import of wines and spirits, and the distribution of wines and
spirits (the "Wine Business"); and (ii) the sale of services from ownership and
operation of wine tourism venues, including vineyard resorts and tasting rooms (the
"Wine Tourism Business").
Issue details
The IPO is completely made up of offer for sale of ₹960cr.
Pre & Post Shareholding
(Pre-Issue)
(Post-Issue)
Particulars
No of shares
%
No of shares
%
Promoter
2,39,45,864
28.4%
2,30,08,661
27.3%
Public
6,02,52,884
71.5%
6,11,90,087
72.7%
Total
8,41,98,748
100.0%
8,41,98,748
100.0%
Source: Company, Angel Research
Objectives of the Offer
o The Objects of offer are to carry out the offer for sale of up to 26,900,530
equity shares, aggregating to 960.35cr by selling shareholders and to
achieve the benefits of listing the equity shares on the stock exchanges.
Sula Vineyards Limited| IPO Note
December 9, 2022
3
Financial Summary
Income Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Net Sales
485
386
424
% chg
-20%
10%
Total Expenditure
436
325
311
Raw Material
227
157
117
Personnel
66
55
65
Others Expenses
143
112
129
EBITDA
49
61
113
% chg
25%
86%
(% of Net Sales)
10.1
15.8
26.7
Depreciation& Amortisation
35
26
24
EBIT
14
35
90
% chg
153%
154%
(% of Net Sales)
2.9
9.1
21.1
Interest & other Charges
33
33
23
Other Income
2
4
3
(% of PBT)
(9.0)
111.5
4.0
PBT
(17)
3
70
% chg
-118%
2083%
Tax
(1)
0
17
(% of PBT)
8.4
5.4
25.0
PAT
(16)
3
52
% chg
-119%
1630%
Share in profit of Joint venture
-
-
-
PAT
(16)
3
52
% chg
-119%
1630%
(% of Net Sales)
(3)
0.8
12.3
Basic EPS (Rs)
(2.0)
0.4
6.4
Fully Diluted EPS (Rs)
(2.0)
0.4
6.4
Source: Company, Angel Research
Sula Vineyards Limited| IPO Note
December 9, 2022
4
Balance Sheet (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
SOURCES OF FUNDS
Equity Share Capital
15
15
16
Reserves& Surplus
285
290
380
Shareholders’ Funds
300
305
395
Minority Interest
2
-
-
Total Loans
393
315
240
Other Liabilities
8
10
2
Liabilities held for sale
14
Total Liabilities
703
643
637
APPLICATION OF FUNDS
Net Block
352
318
360
Goodwill
3
0
1
Capital Work-in-Progress
0
0
1
Investments
0
0
0
Current Assets
443
374
371
Inventories
171
144
162
Sundry Debtors
152
124
109
Cash
40
52
20
Loans & Advances
2
1
1
Other Assets
77
54
78
Current liabilities
110
92
105
Net Current Assets
333
282
266
Deferred Tax Assets (net)
0
0
0
Deferred Tax Liabilities (net)
18
16
17
Other Assets
33
27
26
Assets held for sale
32
Total Assets
703
643
637
Source: Company, Angel Research
Sula Vineyards Limited| IPO Note
December 9, 2022
5
Cashflow Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Profit before tax
(17)
3
70
Depreciation
35
26
24
Change in Working Capital
2
48
-14
Interest / Dividend (Net)
30
29
19
Direct taxes paid
(11)
7
-17
Others
6
6
6
Cash Flow from Operations
45
120
87
(Inc.)/ Dec. in Fixed Assets
(45)
-16
-55
Movement in Bank Balances (Net)
(1)
(9)
0
Interest Received
1
2
2
Proceeds for sale of PPE and invesment in subsidiary
1
1
12
Payment pursuant to business combination
0
0
(16)
Other non-current investments
(0)
0
0
Cash Flow from Investing
(44)
(22)
(57)
Proceeds from Issue of Share capital
2
2
56
Proceed / (Repayment) of long term borrowings
19
(20)
-11
Interest Paid on lease liabilities
0
0
0
Payment of lease liabilities
(5)
(6)
-5
Interest / Dividend (Net)
(28)
(32)
-20
Proceed/ (Repayment) of short term borrowings
57
(39)
(61)
Dividend paid
(11)
0
(19)
Cash Flow from Financing
33
(94)
(61)
Inc./(Dec.) in Cash
34
3
-31
Opening Cash balances
3
37
41
CCE acquired in business combination
0
0
0
Transfer to assets of disposal group
0
0
0
Closing Cash balances
37
41
10
Source: Company, Angel Research
Key Ratios
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Valuation Ratio (x)
P/E (on FDEPS)
-
960.3
55.5
P/CEPS
151.3
100.8
38.2
P/BV
9.6
9.5
7.3
EV/Sales
6.7
8.2
7.3
Per Share Data (Rs)
EPS (Basic)
-2.0
0.4
6.4
Cash EPS
2.4
3.5
9.3
Book Value
37.3
37.6
48.8
Returns (%)
ROE
-5.3
1.0
13.2
ROCE
2.0
5.7
14.1
Source: Company, Angel Research;
Sula Vineyards Limited| IPO Note
December 9, 2022
6
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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