Sula Vineyards Limited — Investor Meet, 11-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. **Financial Performance:** Sula Vineyards reported a modest revenue growth of 1% in its own brands segment, continuing its 11th quarter of growth despite challenges in urban consumption. The elite and premium segments grew by 3% in volume and 5.5% in value, now constituting 80% of the portfolio. However, overall performance was hindered by election-related disruptions in Maharashtra and reduced WIPS credit, leading to a 26% drop in EBITDA to INR 54 crore and an EBITDA margin of 25%, impacted by geographic diversification.

2. **Future Outlook and Growth Drivers:** Management expressed confidence in restoring quality growth in FY26, focusing on profitability improvements. With challenges in urban markets likely to persist, they anticipate Q4 to align with last year's performance. The company expects positive contributions from its wine tourism segment and new bottling facilities to enhance growth.

3. **Order Book and Operational Updates:** The Nashik unit commenced bottling, projected to enhance WIPS benefits significantly from FY26. Wine tourism revenues surged by 12%, driven by high occupancy rates and increased guest spending during a festive season marked by a successful Sula Fest, setting new attendance records.

4. **Analyst Q&A Insights:**

- Analysts queried revenue challenges and profitability impacts, to which management noted that reducing discounts could improve margins despite low urban demand.

- On market positioning, management recognized that while Sula leads in retail sales due to consumer preference, discounts significantly influence HORECA channels, where they remain competitive.

- Concerns about operational strains, particularly in supply chain management and the impact of pending payments from Telangana, were addressed affirmatively, assuring improved cash flows.

- Investment in Capex is robust, aimed at enhancing capacity and renewable energy initiatives.

5. **Market or Regulatory Updates:** The ongoing slowdown in consumption, especially in urban areas, was a recurring theme, impacting revenue forecasts. However, a stable regulatory environment regarding WIPS is expected to bolster future earnings.

6. **Strategic Focus Areas:** Key themes included enhancing brand presence in Tier I and II cities, improving profitability, and focusing on sustainable growth through innovative practices and strategic marketing.

7. **Investor Insight:** Given the current financial health and growth potential, with a strategic focus on long-term profitability despite short-term challenges, the sentiment leans towards a 'hold' position in anticipation of a market recovery that could favor Sula Vineyards.