Sula Vineyards Shares Dip 5% as 13.1% Equity Trades in Block Deal
Sula Vineyards, a leading name in the Indian wine industry, faced a 5% drop in its share prices during morning trading on August 31. This decline followed a substantial block deal that saw 13.1% of the company's equity change hands. The block deal, which amounted to ₹540 crore, involved the exchange of around 1.1 crore shares at an average price of ₹490 each. This average price reflected a 3.8% discount compared to the previous day's closing rate of ₹508.70. As the clock struck 9:19 am, Sula Vineyards' shares were trading at ₹495.50 on the National Stock Exchange, indicating a 2.59 % decrease from the prior day's closing value.
Despite the significance of the block deal, the identities of the buyers and sellers remained undisclosed initially. Speculations arose earlier, as a report suggested that Verlinvest Asia Pte, a major institutional investor in the sole listed wine producer in India, intended to reduce its stake. Verlinvest Asia Pte, which initially held an 18.64% stake, aimed to shed 12.56% of its ownership. Consequently, their post-transaction equity would settle at 5.54%, with this remaining stake being subject to a 60-day lock-in period.
Earlier this month, Sula Vineyards achieved record-breaking sales, individual tastings, and visitor numbers from August 12 to 14 at its wine-tourism facilities located in Nashik and Bengaluru. These accomplishments were realized across the company's wine tourism facilities situated in Nashik and Bengaluru. However, the Maharashtra excise department sent a demand notice to Sula Vineyards at the beginning of the month, requiring the payment of excise duty amounting to ₹115 crore for wine manufactured using grapes from Maharashtra or from other states.
On the trading day of August 30, Sula Vineyard's stock settled at ₹509.30 apiece on the Bombay Stock Exchange (BSE), marking a decrease 0.46 % compared to the prior day's closure.
Renowned as India's largest and most distinguished wine brand, Sula Vineyards has significantly contributed to shaping the Indian wine landscape. The company introduced various grape varietals to the Indian market, including Chenin Blanc, Sauvignon Blanc, Riesling, and Zinfandel. Notably, Sula's flagship brand remains Sula, complemented by other popular labels such as RASA, Dindori, The Source, Satori, Madera, and Dia.
Financial Performance and Returns
In a recent financial report, Sula Vineyards unveiled a noteworthy 24.4% increase in first-quarter profit, driven by robust demand for its premium wines and increased visitation to its vineyard locations. The company's consolidated net profit for the quarter stood at ₹13.68 crore ($1.65 million), a substantial rise from ₹11 crore in the corresponding period of the previous year. Moreover, its revenue from operations witnessed a 21% surge, reaching ₹117 crore, with its Own Brands segment contributing approximately 89% of this revenue. Notably, revenue from wine tourism also experienced an 11% uptick, reaching ₹11.4 crore, primarily fueled by a significant 70% increase in visitors at its Bengaluru winery.
Sula Vineyards, listed on the Indian market in December 2022, has yielded investors a notable 50% positive return, despite a recent 6% dip in stock value over one month. The company's resilience in the face of short-term fluctuations underscores its growth potential in the Indian wine sector.
In conclusion, Sula Vineyards, a prominent player in the Indian wine sector, faced a dip in its share prices due to a notable block deal. Nevertheless, the company's strong financial performance, innovative product portfolio, and expanding wine tourism segment continue to position it as a key influencer in the Indian wine industry.
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