Sula Vineyards IPO Subscription And Listing Expectation

Sula controls 52% of the wine market in India. This is a huge market share for any company. One would expect an overwhelming response to the IPO. However, this has not been the case primarily because the complete IPO is an offer for sale meaning no funds will be directed towards the expansion of the company.

Sula IPO opened on 12 Dec and closed on 14 Dec with a price band of Rs. 340 to Rs. 357. The IPO is expected to raise Rs. 960.35 crores. The IPO was subscribed 2.33 times, much less than the expectations. The Qualified Institutional Buyers (QIBs) category was subscribed 4.13 times, the Non-Institutional Buyers (NIIs) category was subscribed 1.51 times and the retail portion by 1.65 times. The finalisation of the basis of allotment is scheduled for 19 Dec and the listing is planned for 22 Dec. All eyes are now on the Grey Market Premium (GMP) which is not showing positive signs (currently -1) in spite of the positive market conditions. The GMP as on 14 Dec is Rs. 356 which is less than the offer price.

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. As of 2022, it controls 52% of the market share. It currently has 56 wine labels including the ones for export. 90% of its revenue is from the wine business and 10% from 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.

The pioneer of wine production in India was Indage long before Sula came to the scene. Today there are several players in the market but the largest Indian manufacturer of wine is Sula vineyards. Nashik is the Indian wine capital primarily because Maharashtra introduced a relaxed wine policy in 2001. This led to the establishment of many new wineries in Maharashtra, and states like Karnataka and Tamil Nadu followed suit.

The Indian wine market is still in its nascent stages but it is attracting wine exporters from all over the world for its potential. However, India is a very price-sensitive market and imported wines are beyond the reach of most. Indian wines priced between Rs.500 to Rs.1200 are the most popular. High taxes on imported wines also helps the domestic wine market. Indian wine consumption has grown 25-30% annually over a 5-year period. The urban population is increasing and youth are craving an alternative to hard liquors and developing a more refined taste. Wine is more acceptable in our cosmopolitan culture. India has a large millennial population with more disposable income for things earlier perceived as a luxury. The Govt of Maharastra is planning on relaxing the rules on the sale of wine. Wine may soon be available in supermarkets alongside groceries similar to many countries abroad. 

With so many factors in its favour, one would have expected this IPO to be a blockbuster. What has impacted this initial public offer so negatively? 

Several new companies have emerged in the last 2 decades. Although Sula currently has the highest market share it has tough competition in the years ahead. Companies like Grover Zampa, Fratelli Wines,  Krsma Estates and several others are now strengthening their foothold in the wine market. Many distilleries are publicly listed in India but his IPO is the first of its kind in the wine segment. The impact of this IPO will be on the other players in the market as well. There is tremendous potential for the growth of the wine industry in India, not just for Sula but for all the other players in this category. We hope this potential is recognised by the market and the listing of Sula shares on 22 Dec beats all expectations. 

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
Subscription 2.33 times
Qualified Institutional Buyers (QIBs)4.13 times
Non-Institutional Buyers (NIIs) 1.51 times
Retail Investors1.65 times
Grey Market Premium 15 Dec-1  (Rs.356 per share)
Sula Vineyards IPO Subscription And Listing Expectation
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