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Sula Vineyards IPO – Should You Subscribe Or Not?

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Sula Vineyards LTD IPO- Price of Sula IPO, Issue Date...2022
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Sula Vineyards – In 2021, it rained IPOs like there was no tomorrow. Then came 2022, and all the IPO-rush benumbed. To put this into perspective, the same period last year had 44 IPOs debuting on the Indian stock markets, including the new age companies like Zomato, Nykaa, and others. However, in 2022 the number of IPOs listed between January and October is 22, which is 50% less than last year.

We have mentioned the reasons for the drying up of IPOs in 2022 in another article titled “Why the IPO Boom Came To An End? Read the Article To Know More”. Does this mean the IPO performance has also been dismal? Interestingly, there is not much difference in the listing day performance of IPOs in 2021 and 2022. Refer to the table below to see the performance

IPO Performance of Companies Listed in 2021 and 2022
Year Number of IPOs # Of Positive Listings % Of Total # Of Negative Listings % Of Total
2021 44 31 70.45% 13 29.55%
2022* 22 15 68.18% 6 27.27%

*The IPO period for both years is considered from January to October. Research & Ranking internal analysis

The table indicates that if you had invested in all the IPOs listed between Jan and Oct 2022 and exited on the listing days, you would have made profits 68% of the time.

So, let’s return to the topic of this article, SULA Vineyards IPO – Should You Subscribe or Not. The winemaker has filed the Draft Red Herring Prospectus (DRHP) with SEBI and is awaiting approval.

In this article, we will talk about the details of Sula Vineyards IPO, what the company does, the promoters, the company’s financials, and how the company intends to use proceeds from the public offering. This will give you a clearer idea if you should subscribe or give it a pass.

Sula Vineyards IPO Details

India’s largest winemaker is going for a 100% offer for sale or Book Built issue, and the company will not receive any proceeds from the IPO. If the application goes through, Sula Vineyards will be the first winemaker to list on the Indian markets.

The following table has all the information about SULA Vineyards IPO.

IPO Details
IPO Status SEBI Approved
IPO Date Yet to be announced
IPO Size Yet to be decided
No of Shares for IPO 2,55,46,186 (2.55Cr)
IPO Price Band Yet to be decided
Issue Type Book Built
IPO Listing at BSE & NSE
Face Value Rs. 2/Equity Share

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Know the Jargon

What Is Book Built Issue?
There are two types of initial public offerings – Fixed Price Issues and Book Building Issues. In a fixed price issue, the company decides the IPO price of a share. In a book-building problem, the company does not initially define a fixed price but a price range. Companies often opt for book-building issues because it allows them to decide a fair price based on the bids collected during the IPO period.

Category-wise % of shares offered

image
Source: SULA Vineyards DRHP

What does Sula Vineyards do?

Being the producer of alcohol-based beverages, it’s easy to understand Sula Vineyard’s business. The company’s business is broadly divided into two streams – the production of wine and wine tourism.

The winemaker produces 56 different labels of wine, including several well-known brands such as Sula, RASA, Dindori, Madera, and others. The company has production plants in Maharashtra and Karnataka. With market leadership in the burgeoning sector, Sula Vineyards services close to 8,000 hotels, resorts, and caterers in India. 

The wine business also includes producing, importing, and distributing wines and spirits. In addition, as a part of its wine tourism business, the company owns two functional vineyard resorts in Nashik, Maharashtra. Sula Vineyards is the inventor of wine tourism in India and is home to the first wine tasting room, winery tours, vineyard resorts, and wine music festival.

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Leading the D2C Pie

An interesting fact is that the wine tourism business has opened a D2C (direct-to-consumer) stream to sell wine directly to consumers. The D2C stream generated a whopping Rs. 24.21 crores in FY21. In addition, Sula Vineyards wines are also available on various eCommerce websites, helping it capture a sizeable pie in the D2C stream. As a result, the company recorded the highest D2C sales in the Indian wine industry in FY21.

Financial Health – Sula Vineyards IPO

Sula Vineyards added Rs. 454 crores to its topline and contributed Rs. 52 crores to the bottom line in FY22. A look at the following chart will give you an impression of a drop in revenue; however, the profits have increased.

image 1
Source: SULA Vineyards DRHP

In the financial year 2021, Sula Vineyard’s revenue dropped around 20% compared to the previous year. The decline can be attributed to the period of COVID-19. However, the numbers recorded in the financial year 2022 indicate that business activities are nearing pre-pandemic levels. Interestingly, despite the decline in businesses, the profits have increased by 425% during FY20-22.

Know the Jargon
What Are the Top Line and Bottom Line?
In investing parlance, revenue and net profit are called top line and bottom line, respectively. Top line refers to the company’s total business during a particular period. The bottom line means the net profit a company arrives at after deducting all operating expenses, depreciation, interest, and taxes.

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What Will Sula Vineyards Do with IPO Money?

Sula Vineyards intends to carry out a sale of the existing 2.55 crore shares in the IPO. The sellers will be existing shareholders. Since it’s a pure offer for sale, the company will not receive any sum from the money generated from the offer. Instead, the winemaker will distribute the funds with the selling shareholders in proportion to their shareholding.

Should You Subscribe for Sula IPO or Not?

Should You Subscribe for Sula IPO or Not? – SULA Vineyards filed the DRHP with SEBI a few months ago, so the IPO may come anytime soon. From the information available in the DRHP, the winemaker appears to be a good company. However, as mentioned at the beginning of the article, the IPO rush has indeed remained slow in terms of volumes. Still, there is not much difference regarding the listing day performance of the companies’ IPO-ed in 2021 and 2022.

Although no winemaker is listed in India, Sula Vineyards considers United Breweries Ltd., Radico Khaitan Ltd., and United Spirits Ltd. as its closest competitors. So, being the first winemaker to get listed gives the winemaker a competitive advantage. Only time can tell how the markets treat Sula Vineyards IPO.

Will Sula pop open a bottle on its listing day? Let us know your thoughts.

As a SEBI registered investment advisor, we cannot recommend a stock(s) for investment without assessing an investor’s risk profile. Hence, subscribe to our investment advisory services to get sound investment advice.

FAQ

What is Sula Vineyards IPO?

A total of 2.54 crore equity shares in Sula Vineyards are being offered for sale by shareholders.

What is Sula Vineyards IPO lot size?

Information unavailable.

When will Sula Vineyards IPO allotment be available?

Information unavailable.

What is the minimum subscription lot size for retail investors?

Retail investors must apply for at least one lot.

The Sula Vineyards IPO’s subscription period will begin when.

Information unavailable.

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