Sula Vineyards IPO, Allotment And GMP

Sula vineyards IPO is being launched on 12 Dec 2022 and will close on 14 Dec 2022. Sula vineyards submitted its Draft Red Herring Prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (SEBI) in July 2022. It recently received SEBI’s approval and the IPO was launched this December.

Sula Vineyards was established in 1996 by Rajeev Samant. Rajeev, a Stanford graduate was exposed to the California wine scene while working at Oracle. In 1994 he explored the idea of growing table grapes in their ancestral land in Nasik. He learned the art of wine making from  Kerry Damskey in California. Later  Kerry Damskey became Sula’s Master Winemaker. By the year 2000  it launched  a variety of wines like Sauvignon Blanc, Chenin Blanc, Zinfandel, Riesling, Red Sparkling, and dessert wines.

Its wine processing units are located in the west of India and southwest of India. The flagship facility is located in Nashik, Maharashtra, and other processing units are situated in Maharashtra’s Dindori, and Bengaluru and Basavakalyan in Karnataka.

The name “Sula” came from Rajeev’s mother’s name – “Sulabha” – and it symbolised the rich, Indian heritage of his wines. This was a wine that took pride in being Indian, being the first company in the country to use an Indian logo. Sula was the pioneer in the Indian wine market and several other companies followed suit in the next two decades.

Sula Vineyards Limited  is India’s largest wine producer and seller as of March 31, 2022. It distributes wines under  several popular brands, namely RASA, Dindori, The Source, Satori, Madera, and Dia, its flagship brand Sula and many more. It currently has 56 wine labels including the ones for export. 90% of its revenue is from the wine business and 10% for wine tourism. Sula was the first to start the concept of wine tourism in India. The wine-maker launched the first wine-themed music festival in India, “SulaFest”, at its Nashik facility in 2008.

Positives for the Sula IPO

  1. Sula has the largest distribution network among the wine companies in India. It has 23,000 points of sale, including 13,000 retail touch points and 9000 hotels and restaurants.
  2. With its wine tourism network it has built a strong D2C sales channel.
  3. It has long term supply agreements with grape growers which ensures a steady supply of grapes for over 10 years.
  4. Its top and bottom lines have greatly improved in the last 2 fiscal years.
  5.  Its turnover/net profit has increased from  Rs 523.21 crore/ Rs. -15.94 crore in the fiscal year 2020 to Rs 456.7 crore/Rs + 52.14 crore in 2022. In the second quarter of 2022 the company earned a net profit of Rs 30.51 crore on a turnover of Rs 225.76 crore. 
  6. The company follows sustainable operating methods with almost 60% of their power consumption being  generated  in house with the help of solar panels.
  7.  It has a market share of over 52% in the wine segment in India. 
  8. Company strategies include  building wine awareness in Tier-1 and 2 cities of India.

The issue type is a complete offer on sale. The sellers are the founder and CEO Rajeev Samant, Cofintra SA, Haystack Investments, Saama Capital III, SWIP Holdings, Verlinvest France SA, Verlinvest SA and others. The lead managers are  Kotak Mahindra Capital Company Limited, CLSA India Private Limited and IIFL Securities Ltd . KFin Technologies Limited is the registrar for the IPO. The shares are proposed to be listed on BSE, NSE.

Sula vineyards raised Rs. 288.10 crores from anchor investors before the IPO.  A total 22 investors bought shares of the company via anchor book including marquee participants – Abu Dhabi Investment Authority, Goldman Sachs, New York State Teachers Retirement System, Ashoka India Equity Investment Trust Plc, Segantii India Mauritius, Morgan Stanley, BNP Paribas Arbitrage, and Citigroup Global Markets Mauritius.

Domestic investors like Aditya Birla Sun Life Trustee, HDFC Mutual Fund, SBI Mutual Fund, ICICI Prudential Life Insurance, HDFC Life Insurance, Aditya Birla Sun Life Insurance, and Max Life Insurance also bought shares in the company.

The issue size is Rs.960.10 crores and the allocation decided is 35% for retail investors, 15% for  non-institutional investors (NIIs) and the biggest chunk of 50% for qualified institutional buyers (QIB).

“This IPO will bring the wine segment into the limelight,” said Ronak Soni, analyst at Equirus Securities Pvt. “It’s a fast-growing segment.” This IPO could have a positive effect on the whole industry, especially the  company’s local competitors Fratelli Wines and Grover Zampa Vineyards.  The offer is reasonably priced and the  current grey market premium is Rs. 34 per share. 

Quick Facts

IPO Opening Date12 Dec 2022
IPO Closing Date14 Dec 2022
Face Value per ShareRs. 2 per Share
Lot Size42 Sharee
Price BandRs. 340 to Rs. 357
Issue SizeRs. 960.35 crores
Issue TypeOffer For Sale
Number of Shares on Offer26,900,530 shares
Allotment  Date  (tentative)21 Dec 2022
Listing Date22 Dec 2022
Sula Vineyards IPO, Allotment And GMP
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