Sula Vineyards shares plummet 8% after Q4 profit declines
Sula Vineyards, India's top winemaker by revenue, saw an 8% drop in its shares on Thursday. At the time of writing, the stock was trading at ₹498. This significant single-day decline is the largest since August 2023. The fall in share price came after the company announced a 4.2% decrease in net profit for the fourth quarter, falling to ₹13.6 crore from ₹14.2 crore year-on-year due to increased expenses outpacing demand for premium brands like Dindori and Rasa.
Rising costs impact Sula Vineyards's bottom line
Despite a nearly 10% rise in revenue to ₹131.7 crore in the fourth quarter, driven by a robust 14% increase in wine sales, Sula Vineyards's profits were hit by a nearly 9% surge in raw material costs. The cost of key ingredients like grapes, yeast, and sugar rose to ₹88.8 crore, significantly impacting the company's bottom line. Additionally, the company's earnings before interest, tax, depreciation and amortization (EBITDA) margin shrank from last year's 26.4% to 25.3% in the March quarter.
Wine tourism sector flourishes amidst Sula Vineyards's profit dip
Despite the recent slump in profits, Sula Vineyards saw a silver lining with its wine tourism segment witnessing an impressive growth of over 31%. Sula CEO Rajeev Samant emphasized that wine tourism is a top priority for the company and that they are rapidly expanding in this sector. Four out of five analysts tracking Sula Vineyards still recommend a "buy" for the stock while one has given a "sell" rating.
