Sula Vineyards listing on BSE, NSE: Sula Vineyards made its stock market debut Thursday on a muted note. The shares were listed at Rs 361 on the National Stock Exchange (NSE), a premium of 1.14 per cent over the issue price of Rs 357 each.
Sula Vineyards’ initial public offering (IPO) was open from Monday, December 12 to Wednesday, December 14, 2022, receiving 2.33 subscriptions on the last day of the offering. The initial share sale of Rs 960-crore received bids for 4,38,36,912 shares against 1,88,30,372 shares tendered.
The public offering was an all-sale offer, meaning the company received no proceeds from the offer and the money went to the selling shareholders.
“Lower promoter holdings are cause for concern. Investors with cash surpluses may want to consider investing for long-term reward,” said Manoj Dalmia, Founder and Director of Proficient Equities.
As of the end of the quarter in September, Sula Vineyards had outstanding loans of Rs 231.5 crore and cash and cash equivalents of Rs 13 crore.
Sula’s financial performance has been inconsistent over the past five years. For the year ending March 2018, it reported a net profit of Rs 12.3 crore. Next year, the net profit was Rs 7.2 crore followed by a loss of Rs 16 crore. For the year ending March 2021, the Covid-affected year, the net profit was Rs 3 crore. And the year after that just before the IPO, the net profit rose to Rs 52 crore.
“Looking at the financial track record, the issue is fully priced in and excludes all short-term growth,” said Prashanth Tapse, Senior VP Research at Mehta Equities.
What should investors do now?
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said, “The company’s muted listing debuted at Rs. 361 on the issue price of Rs. 357. But the issue received positive reactions from both institutional and retail investors. It is the largest wine producer with wine tourism. It enjoys the advantage of high barriers to entry and has the largest wine distribution network and sales presence. Financial performance also improves. This release from Sula Vineyards had a P/E valuation of 54.67, which seems fully priced; however, the issue was a full offer for sale, and low promoter holding is also a concern. So allottees who have signed up for the listing premium public offer are advised to keep their stop loss at Rs. 350 and waiting for further increase to Rs. 380.”
The company decided to allocate 80,70,158 shares to investors at Rs 357 each. Fund was raised from 22 investors, including BNP Paribas Arbitrage, Morgan Stanley (Asia) Singapore Pte Ltd, Citigroup Global Markets Mauritius Pvt Ltd, Goldman Sachs and Abu Dhabi Investment Authority.
Companies such as Kotak Mahindra Capital Company, CLSA India and IIFL Securities acted as the book-running lead managers for the IPO, while KFin Technologies was the registrar of the share sale.
Sula Vineyards Limited is India’s largest wine producer and marketer as of March 31, 2022. The company also distributes wines under a bouquet of popular brands including RASA, Dindori, Satori with the flagship brand Sula being the creator of the wine category in India. In particular, Sula is recognized as the market leader in wine varieties, including red, white and sparkling wines.
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