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1. At a Glance
Sula’s Q4 recovery is real but fragile. The company posted ₹135 Cr revenue in the quarter, up 7.3% YoY, and management declared “for the first time in nearly 2 years, we recorded monthly Own Brands and Wine Tourism growth for 4 straight months.” The wine tourism business crossed ₹100 Cr in annual revenue—a structural pivot away from volume grind.
Yet FY26 as a whole contracted: ₹556 Cr revenue, down 4% YoY. Profit after tax collapsed 61.2% to ₹26 Cr. The market pays 48.7x earnings here; the peer median sits at 42x. The tension: a company that finally stabilized demand and is spending to capture it, but remains caught in margin compression from high-cost grape inventory procured in earlier harvests.
2. Introduction
Sula Vineyards was India’s category creator for wine, listing at ₹960 Cr in an all-OFS in December 2022. The business is built on three pillars: owned wine brands (87.5% of H1 FY26 revenue), wine tourism (10.5%), and imports (2%). The first two years post-IPO were bruising—urban demand weakened, state excise shocks hit key markets (Telangana’s retail licence expiry tanked sales), and elections disrupted buying calendars.
By Q4 FY26, demand normalization arrived. The company grew revenue sequentially and YoY, extended distribution (targeting 5 new CSD listings to reach 14 total in defence channels), and pushed premiumization—elite and premium wines now account for 79% of the mix, up from 75% in Q3. Management signaled FY27 as the year growth returns to trend.
3. Business Model: WTF Do They Even Do?
Sula operates four owned and two leased wineries across Maharashtra and Karnataka, with a combined installed capacity of 19.2 million litres per year. The company sources 2,800+ acres of contracted vineyards—90% of grape needs—with 2,200+ acres locked under long-term supply contracts (up to 12 years) and built-in price escalations. This sourcing scale exceeds the next two Indian wine producers combined.
The brand portfolio sprawls: 69 labels across SULA (13), RĀSĀ (3), The Source (now 8 labels, the high-margin engine), Dindori (3), York, Mosaic, Dia, Madera (27 SKUs), and imports (17). The price segmentation is intentional—elite (₹1,000–2,100), premium (₹700–950), economy (₹400–700), popular (<₹400)—but the firm has bet hard on premiumization. Elite and premium mix lifted to 79% in Q4, a swing of ~250 bps year-on-year.
Wine tourism anchors the second leg. Three vineyard resorts (The Source at Sula, Beyond by Sula, Haven by Sula—the last added 30 keys in Q3) plus tasting rooms at Domaine Sula, Milestone Cellars, and York pulled in 330,000+ visitors in FY25 (rebounded to >400,000 in FY26). Occupancy >70% in core resorts even as Haven scaled. The tourism segment is no longer a side venture—it’s the growth engine.
4. Financials Overview
Figures are consolidated, in ₹ crore. Latest period is FY26 (March 2026). Result type: Annual.
| Metric | FY25 | FY26 | YoY Change |
|---|---|---|---|
| Revenue | 579 | 556 | -4.0% |
| EBITDA | 149 | 104 | -30% |
| PAT | 70 | 26 | -63% |
| EPS (Annualised FY26) | 8.32 | 3.04 | -63% |
The story of FY26 is margin destruction. Revenue held flat-ish (a decline masked by tourism), but operating profit fell 30% and net profit cratered 63%. The culprit was multi-layered: higher-cost grape inventory carried forward from 2024 harvest (when the company expected to sell premium volumes), a transition to third-party sourcing for wine tourism that added 400–500 bps to COGS, and a shift in product mix toward lower-priced SKUs (using expensive wine grapes in economy bottles). One-off benefit: ₹20 Cr accrual from the Wine Industrial Promotion Scheme (WIPS) in H1 mitigated further damage.
EBITDA margins compressed to 19% in FY26 from 26% in FY25. Operating margins fell to 20.6% (Q4) from 27.2% (Q1 FY25).
Concall insight (May 2026): Management acknowledged the grape cost shock was cyclical—once cheaper 2025-harvest grapes flow through, margins should recover sequentially. But the firm explicitly stated it will not “return to 30% margins anytime soon.” Cost discipline is tightening: operating expenses fell 3% YoY in Q4 despite revenue growth.
5. Market Expectations & Historical Multiples
This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.
| Metric | Current | Historical Average (5-yr) | Peer Median |
|---|---|---|---|
| P/E Ratio | 48.7x | ~35x | 42x |
| EV/EBITDA | 15.2x | ~12x | 13x |
| ROE | 4.61% (last year) | 11.2% (3-yr avg) | 18–25% (peers) |
| ROCE | 7.55% | 13% (FY25 last calculated) | 12–24% (peers) |
The market currently pays 48.7x on FY26 earnings. This sits above both its own historical band and the peer median of 42x. The premium is pricing in a demand recovery narrative—the “growth re-inflects in FY27” thesis that management laid out in May. Yet ROCE has halved from 13% to 7.55%, and ROE dropped to 4.61% (last year) from a 3-year average of 11.2%, signalling capital is inefficiently deployed.
The company’s own multiple premium to peers may be reflecting its market leadership (60% value share in elite/premium, 50%+ overall market share) and the nascent tourism story. But deteriorating returns on capital are a countervailing fact.
6. What’s Cooking
Chandon estate acquisition. In March 2026, Sula signed a binding agreement to acquire Domaine Chandon’s 19-acre Dindori estate for ₹20 Cr. The asset has a 4.5-litre bottling capacity, scalable to 13L. Regulatory approvals pending; conveyance deed still pending by end Q1 FY27. This is the largest single asset move in years and signals a shift toward wine tourism and production infrastructure.
The Source scaling. The Source grew 35% YoY in Q4 (20% for full FY26), lifting its contribution to 10%+ of Own Brands revenue—a 250 bps gain YoY. The line now includes 8 labels spanning red, white, rosé, and bubbles. Recent additions (Source Chardonnay, Source Grenache Red) sold out in FY26; four new variants (Source Moscato, Source Pinot Noir, Sula Muscat Blanc, Sula Merlot) will form ~6% of volume in FY27.
CSD channel expansion. Defence and canteen channels (CSD) are a high-margin, high-receivables segment. Sula got 5 new CSD listings approved, taking the slate from 9 to 14 by Q4 FY27. After the last expansion (5→9), CSD sales grew 21% in FY26. Dia (economy) is the new addition and flagged as “a standout performer.”
Wine tourism capex pivot. Management announced a strategic shift: “lion’s share of our capex over the next 3 years [is] earmarked for expanding wine tourism.” FY27 slate includes a retail bottle shop at Domaine Dindori (Q1), amphitheater capacity expansion for SulaFest (Q2), and a 5,000 sq ft air-conditioned event pavilion at the flagship Nashik campus (Q3). Haven by Sula is expected to reach higher occupancy as the property matures.
UP becomes a breakout market. Uttar Pradesh delivered >50% growth in FY26 and ~100% in Q4 alone, driven by policy enabling new retail licences. Sula claims category leadership in non-fortified wine in UP and is planning “another bumper year” in FY27.
CFO change. Abhishek Kapoor resigned effective 14 July 2026; Rinku More appointed CFO designate from 15 July 2026. A management continuity risk, though minimal given the small size of the CFO role relative to MD Rajeev Samant’s outsized influence.
7. Balance Sheet
| Item | FY24 | FY25 | FY26 |
|---|---|---|---|
| Total Assets | 1,026 | 1,076 | 1,089 |
| Equity (Capital + Reserves) | 550 | 586 | 588 |
| Borrowings | 324 | 315 | 333 |
| Other Liabilities | 152 | 174 | 169 |
| Total Liabilities | 1,026 | 1,076 | 1,089 |
The balance sheet balances. Borrowings inched up from ₹315 Cr to ₹333 Cr—not dramatic, but a signal that capex is being debt-funded. Net cash stands at ~₹280 Cr (cash ₹9 Cr minus borrowings ₹333 Cr = net debt). Debt/EBITDA rose to 3.2x (₹333 Cr ÷ ₹104 Cr FY26 EBITDA), uncomfortable for a company guiding margin recovery but not a crisis. ICRA revised the outlook on Sula’s A+ rating to Negative in November 2025, citing deteriorating profitability and high working capital intensity.
Three observations:
The company is essentially debt-free on a net cash basis, but the EBITDA erosion means leverage ratios look tighter. The registered office sale for ₹27 Cr (announced June 2026, shifting offices from 1 July) is a one-off liquidity boost but not core business relief. Working capital has blown out: receivables days hit 156 (from 109 in FY24), driven by CSD channel and delayed Telangana Government payouts (though management said this is “much in control” as of May).
8. Cash Flow: Sab Number Game Hai
| Year | Operating | Investing | Financing |
|---|---|---|---|
| FY24 | 121 | -43 | 2 |
| FY25 | 58 | -75 | -74 |
| FY26 | 101 | -33 | -67 |
Operating cash jumped 73% to ₹101 Cr in FY26 from ₹58 Cr in FY25. Management credited destocking of channel inventory in Q3 and lower bulk wine inventory from a controlled 2026 harvest. Capex fell to ₹33 Cr (from ₹75 Cr in FY25), a signal that major capacity expansion is winding down. Financing outflows of ₹67 Cr reflect dividend payouts (₹16.89 Cr in FY26, down from ₹30.38 Cr in FY25).
Wisdom line: Cash flows recovered by shrinking capex, not by earnings. Watch whether FY27 operating cash sustains if capex reaccelerates toward wine tourism.
9. Ratios: Sexy or Stressy?
| Ratio | Value | Signal |
|---|---|---|
| ROE | 4.61% | Equity is sleeping on the job. |
| ROCE | 7.55% | Capital is earning below the cost of debt. |
| P/E | 48.7x | The market is paying a two-year recovery premium. |
| Net Profit Margin | 4.6% | Every rupee of revenue yields a pice of profit. |
| Debt-to-Equity | 0.57x | Moderate leverage, but leverage matters less when ROIC is broken. |
The ratios are damning. ROCE at 7.55% means capital deployed is eroding value. ROE at 4.61% implies shareholders are better off in a savings account. The company’s core business—wine production—is caught between a ceiling (regulated pricing, weak urban demand, high grapes costs) and a floor (distribution capex to defend share). Tourism is growing, but contributes only 19% of revenue. Leverage is not the killer; return on that leverage is.
10. P&L Breakdown: Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY24 | 568 | 176 | 93 |
| FY25 | 579 | 149 | 70 |
| FY26 | 556 | 104 | 26 |
Revenue peaked in FY25 and has retreated for two years now. EBITDA has fallen 41% since FY24. The decline is not cyclical churn—it’s structural margin compression colliding with volume softness. The wine business faced headwinds from Telangana disruption (₹3 largest market), Maharashtra excise duty hikes, and a shift to lower-priced SKUs to clear high-cost inventory. Tourism added ₹100 Cr to topline but at lower margins than elite wine. WIPS subsidy (₹54 Cr in FY25, ₹20 Cr accrued in H1 FY26) is a profit prop that expires in FY2028.
11. Peer Comparison
| Company | CMP | P/E | Market Cap (Cr) | ROCE |
|---|---|---|---|---|
| United Spirits | 1,271 | 50.6x | 92,486 | 27.5% |
| Radico Khaitan | 3,592 | 78.0x | 48,145 | 24.2% |
| United Breweries | 1,349 | 95.6x | 35,737 | 10.7% |
| Sula Vineyards | 156 | 48.7x | 1,319 | 7.6% |
| Median (22 cos) | 366 | 41.9x | 1,475 | 12.4% |
Sula sits below the median on ROCE and multiple, but the comparison is deceptive. United Spirits (50.6x) and Radico Khaitan (78x) are pricing in global scale and pricing power; Sula has 60% of India’s elite/premium wine market but faces imported wines once duty cuts materialize. United Breweries trades at 95x (brewing has structural margin advantage); Sula’s wine EBITDA margin is healthier in absolute terms (18% in Q4) but deteriorating.
The peer set reveals a sector truth: liquor is a high-multiple, high-return business if you have pricing power. Sula has category share but not pricing power—regulatory caps, state-by-state policies, and rising grape costs constrain it.
12. Miscellaneous: Shareholding & Promoters
| Holder | % |
|---|---|
| Promoters | 24.6% |
| FIIs | 1.1% |
| DIIs | 17.3% |
| Public | 57.0% |
Promoter holding has eroded from 27% at listing to 24.6%, likely via dividend payouts and some planned dilution. Rajeev Samant (founder, MD) owns 23.26%, while family holds 1.29%. FII interest has evaporated—from 20.6% in Sep 2023 to 1.1% by Mar 2026, a sharp exit coinciding with margin compression and demand weakness.
Promoter note: Rajeev Samant re-appointed as MD for FY2027–FY2029 (announced March 2026). His tenure has been tested—he inherited post-IPO headwinds and steered into wine tourism and CSD expansion. His willingness to downsize margins (allowing low-priced SKU volumes) to clear inventory and defend share is a tradecraft choice, not a business triumph.
13. Corporate Governance: Angels or Devils?
Sula’s board includes independent directors and functional committees. Auditors: BSR & Co. LLP. No major pledges detected. Related-party transactions are minimal. However, the company has faced tax heat: in September 2025, the Deputy Commissioner Nashik issued a ₹6.45 Cr CST (Common Sales Tax) assessment for AY 2022–23; Sula appealed. A subsidiary faced a ₹21.45 Cr income tax demand (AY 2020–21) in April 2025; a rectification dropped it to ₹0.12 Cr in November 2025—a near-complete reversal suggesting procedural error, not evasion.
The CFO exit (Abhishek Kapoor, July 2026) is a minor governance blip but a continuity risk. No director resignations or red flags on conduct. ICRA’s Negative outlook revision (November 2025) cited operational stress (margin compression, high working capital), not governance lapses.
14. Industry Roast & Macro Context
The Indian wine market is tiny—~₹3,000 Cr retail, per industry chatter—and growing at single-digit rates because urban demand is listless. Premium wine drinkers are price-sensitive (paradoxically), and domestic wines have fought a perception battle against imports for years. Sula owns 60% of the elite/premium segment by value but commands discounts on imports due to category positioning and pricing power constraints.
Regulatory arbitrage is vicious. Maharashtra’s WIPS scheme (80% VAT rebate on wine) was Sula’s margin magic—₹54 Cr in FY25—but expires in FY2028. Telangana’s sudden retail licence expiry in FY25 yanked ₹3 largest market overnight. Karnataka and Maharashtra levy excise duty hikes that crimp volumes and margins. The state can tax you out of the market faster than you can pivot distribution.
Ready-to-drink (RTD) wines are a new competitive threat—easier logistics, no storage risk. Sula is launching an RTD variant in Q3 FY27, but RTD cannibalizes margin. The company also faces import competition if FTA cuts bring European wines in at lower duty. Management is cautiously optimistic (“we don’t feel that worried”) about FX tailwinds (Euro strength) and hedging, but that’s a tactical punt.
15. EduInvesting Verdict
| STRENGTHS | WEAKNESSES |
|---|---|
| 60% value share in elite/premium wine; dominant brand portfolio. | ROCE 7.55%; ROE 4.61%. Capital destruction on current returns. |
| Wine tourism crossing ₹100 Cr; 330,000+ visitors; high occupancy rates. | FY26 PAT down 63%; FY25–FY26 revenue declining. |
| Sourcing 2,800+ acres; 90% of grape needs locked in; scale advantage. | High working capital intensity; receivables days hit 156; WIPS subsidy expires FY28. |
| Capex falling to ₹25–35 Cr; debt/EBITDA below 3x; net cash position. | P/E 48.7x vs peer median 42x; FIIs exited (20.6% to 1.1% in 2.5 years). |
| ICRA Negative outlook; tax risks (₹6.45 Cr assessment pending). |
| OPPORTUNITIES | THREATS |
|---|---|
| The Source scaling; 35% YoY growth; eight-label portfolio maturing. | Tariff cuts on imported wine (likely ~1 year out); margin compression from RTD & imports. |
| Chandon estate acquisition; tourism capex pivot; amphitheater & event pavilion. | Continued state-level excise policy volatility; Maharashtra elections, Telangana supply chain. |
| UP breakout; >100% Q4 growth; new retail licences unlocking. | Grape cost relief lagging; margin recovery guidance vague (“not anytime soon” to 30%). |
| CSD expansion (5 new listings, 14 total by Q4 FY27); defence channel high-margin. | FII exit signal; long-term holders exiting; public ownership now 57%. |
Sula is a company that wins categories but loses money doing it. The wine business has market share without pricing power; the tourism business has promise but remains 19% of revenue. The data shows a firm stretched between defending a collapsing domestic profit pool (margins down 63% in two years) and pivoting toward tourism, which is capital-hungry and structural, not cyclical. WIPS is a crutch set to expire. ROCE and ROE are broken. The multiple is front-loaded on a “recovery” that management itself refuses to guarantee. The board approved a sale of the registered office to unlock ₹27 Cr—a tell-tale sign of cash tightness masked by operating flow recovery.
A balance sheet with nothing to hide, a multiple with everything to prove.
Prices referenced are not live; lagged to 15 June 2026, closing price ₹156 on NSE. All figures from consolidated financial statements, March 2026 fiscal year.