Sula Vineyards Limited is India's largest wine producer and seller as of March 31, 2022. They have been a consistent market leader in the Indian wine industry in terms of sales volume and value since Fiscal 2009 crossing 50% market share, by value in the domestic grapes wine market in Fiscal 2012. They have consistently gained market share (on the basis of the total revenue from operations) from 33% in Fiscal 2009 in 100% grapes wine category to 52% in value in Fiscal 2022. Company's business can be 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'). Company distributes wines under a bouquet of popular brands. In addition to the flagship brand 'Sula', popular brands include 'RASA', 'Dindori', 'The source', 'Satori', 'Madera' & 'Dia' with its flagship brand 'Sula' being the 'category creator' of wine in India. Currently, they produce 56 different labels of wine at four owned and two leased production facilities located in the Indian states of Maharashtra and Karnataka. As a part of Wine Tourism Business, they own and operate 'The Source at Sula' and 'Beyond by Sula' vineyard resorts located adjacent to their facility in Nashik, Maharashtra, having a combined room capacity of 67 rooms. They have increased the number of rooms at wine tourism facilities from 33 rooms in Fiscal 2018 to 67 rooms as of September 30, 2022. As of September 30, 2022, they had a workforce of 757 permanent employees. As per financial performance, HEIL has posted total income/net profits of Rs 523.19 Cr / Rs (16.28) Cr (FY20), Rs 421.51 Cr / Rs 2.74 Cr (FY21) and Rs 456.70 Cr / Rs 51.99 Cr (FY22) and Rs 225.76 Cr / Rs 30.28 Cr (6M FY23). So as per last three years data, company has shown zig-zag sales, but net profit increasing. They have posted an average EPS of Rs 3.06 and average RoNW of 5.24% for last three fiscals. Issue is priced at a P/BV of 6.11 as per NAV of 58.40 on 30.09.22. If we attribute annualized earnings of FY23 on fully diluted equity post issue, then asking price is at a P/E of around 49.63, and if we take FY22 earnings than P/E is around 57.81. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, 3 lead managers are associated with this IPO, and have handled around 73 IPOs in last three fiscals.Kotak Mahindra Capital Company Limited : This is 34th IPO from this BRLM. From last 10 IPOs, 4 opened below issue price and remaining opened above issue on the day of listing. As of now, from last 10 IPOs, 2 are trading below issue price and other are trading above issue price. ( As on 07.12.22)CLSA India Private Limited : This is 7th IPO from this BRLM. From last 6 IPOs, 2 opened below issue price and remaining opened above issue on the day of listing. As of now, from last 10 IPOs 2 are trading below issue price and other are trading above issue price. ( As on 07.12.22)IIFL Securities Limited : This is 35th IPO from this BRLM. From last 10 IPOs, 2 opened below issue price and remaining opened above issue on the day of listing. As of now, from last 10 IPOs 2 are trading below issue price and other are trading above issue price. ( As on 07.12.22) As per financials, Sula Vineyards Limited has shown zig-zag sales, but growth in net profit, RoNW is 11.45% and P/E is respectively 49.63 and 57.81 as per annualized FY23 and FY22 earnings, which looks fully priced. Company is in wine business and also market leader in India with more than 50% market share in terms of volume and value. Performance of BRLMs are good. So, we give NEUTRAL rating for this IPO.
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