The public subscription period for Sula Vineyards’ initial public offering (IPO) began on Monday, December 12, and it will end on December 14. The Rs. 340–357 price range per equity share has been set as the IPO price range. The offer is wholly an offer for sale (OFS) by selling stockholders of up to 2.69 crore shares. At the higher price band, the firm hopes to raise Rs 960 crore. Prior to the IPO, the business received Rs 288.10 crore from anchor investors on December 9 when it decided to allocate 80.70 lakh shares to them at the top of the price range. On December 22, Sula Vineyards shares are most likely to make their market debut. People dealing in unlisted securities claim that the grey market premium (GMP) for Sula Vineyards IPO shares is between Rs 35 and 40 per share.
Should you purchase Sula Vineyards’ IPO shares?
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“Sula leads the Indian grape wine market, particularly for premium brands. It has high entry barriers and is positioned to benefit from the expansion of the sector. We like its emphasis on the direct-to-consumer approach, premiumization, and attempts to increase operational effectiveness. The IPO is priced at 49x annualised 1HFY23 EPS P/E. Given that this is a first-of-its-kind offering in the wine market, the IPO may be extravagant. Investors are advised to subscribe for listing gains.
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The firm would be able to increase its margin in the future given the increased revenue share of high-margin categories and the emphasis on owned brand. In the long run, it would be able to increase revenues thanks to its dominant position in a market with high barriers to entry and rapid growth. To SUBSCRIBE for listing gains, we advise.
Anand Rathi Share and Stock Brokers: Subscribe – Long-Term “Sula Vineyards Limited is an established market leader in the Indian wine industry with the largest wine producer in India, the widest and most innovative product offering supported by the largest wine distribution network and sales presence, and the secured supply of raw material with long-term contracts exclusive to Sula. Sula Vineyards Limited is also the leader and founder of the wine tourism industry in India. Sula Vineyards Limited is offered at the top price band with a P/E ratio of 35.8x, a market capitalization of Rs 30,058 million following the issuance of equity shares, and a return on net worth of 11.45%. We rate the Sula Vineyards Limited IPO as “Subscribe- Long Term” because we think the pricing is reasonable.
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There are no comparable competitors with a similar product profile to Sula. The aforementioned competitors are in the market for alcoholic beverages (other than wine), hence they are solely used to benchmark the requested values. Sula is asking for a P/E multiple of 38.5x (to its TTM income) at the highest price range, which is in line with the peer average. We think the domestic wine industry is poised for exponential expansion in light of the lower wine penetration in the domestic market and developing demographic variables including rising per capita income and expanding target audience. Sula is in a good position to take advantage of potential development prospects in the Indian wine market as the country’s largest wine producer and marketer. As a result, the issue is rated “SUBSCRIBE.”
Sula Vineyards Limited is the largest wine producer in India, with market leadership in terms of value and volume across Elite, Premium, Economy (Rs 400-700), and Popular (400), and a higher share of 61% by value in the “Elite” (Rs 950+) and “Premium” (Rs 700-950) categories, according to Canara Bank Securities’ IPO note. Some of its well-known trademarks include “RASA,” “Dindori,” “The Source,” “Satori,” “Madera,” and “Dia.” According to the management, the contribution of company-owned brands has increased from 65% to 80%+ and will continue to do so