Sula Vineyards shares drop 5%, most in nine months, after quarterly net profit declines

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sula Vineyards shares fell 5% on Thursday, May 9, a day after the company reported its quarterly earnings. This is the biggest single-day drop the stock has seen since August 2023.

India’s biggest winemaker by revenue, Sula Vineyards reported 4.2% drop in its profit for the fourth quarter as mounting expenses overshadowed its steady demand for premium brands such as Dindori and Rasa.

The company’s net profit dropped to ₹13.6 crore in the March quarter from the previous year’s ₹14.2 crore.

Its revenue increased almost 10% to ₹131.7 crore in the fourth quarter on a 14% jump in wine sales. However, the price of raw materials, including grapes, yeast and sugar, increased nearly 9% to ₹88.8 crore, hurting the company’s profits.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) margin contracted from last year’s 26.4% to 25.3% in the March quarter.

Its wine tourism segment expanded over 31%. The company’s CEO Rajeev Samant said wine tourism is a top priority and Sula Vineyards is expanding fast.

Four out of the five analysts who have coverage on Sula Vineyards have a “buy” recommendation on the stock. The other one has a “sell” rating.

Sula Vineyards shares were trading 4.7% lower at ₹516.1 apiece at 9:50 AM on Thursday. The stock has fallen over 7% in the past month.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow