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FratelliVineyard — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

Fratelli Vineyards Limited reported stable revenue and positive EBITDA in Q2 FY26, driven by premium product mix and efficiency initiatives. The company's new RTD product, Shotgun, showed strong early traction, capturing 6% market share. Strategic investments in a hospitality project and continued market expansion, including exports and new states, are key focus areas, despite near-term industry headwinds and regulatory discussions.

Highlights

Revenue remained stable at approximately INR 46 crores in Q2 FY26, broadly in line with Q2 FY25.
EBITDA turned positive at INR 1.47 crores in Q2 FY26, up from INR 1.32 crores in Q2 FY25.
Gross margins stood at 79% in Q2 FY26, reflecting stable performance despite a shifting product mix.
The newly launched Shotgun (RTD segment) captured 6% market share within 6 months and is available in 11 states.
The Luxury segment maintained over 50% market share and grew 18% year-on-year.
Fratelli Wines now accounts for 1/3 of the Indian wine market.
Exports contributed close to 3% of revenue in Q2 FY26, up from 1% in the last year.
Planned CAPEX of INR 100 crores, primarily for a new hospitality project and brand building, to be funded via fundraise.

Concerns

Temporary disruption in Telangana market

Key financials

01 Revenue ₹46 Cr -0.86%YoY
02 EBITDA ₹1.47 Cr +11.4%YoY
03 Gross Margin 79% -1.3%YoY
04 Depreciation ₹2.3 Cr +21.1%YoY
05 Finance Costs ₹3.4 Cr +21.4%YoY
06 Luxury Segment Growth 18%
07 Exports Contribution to Revenue 3% +200%YoY
08 RTD Shotgun Market Share 6%
09 RTD H1 Revenue ₹10 Cr
10 Total Debt ₹120 Cr
11 Long-term Debt ₹37 Cr
12 Working Capital/Short-term Debt ₹83 Cr
13 Average Borrowing Cost 10%
14 Retail Sales Mix 65%
15 On-trade Sales Mix 35%
16 Luxury Segment Contribution to Topline 13%
17 Shotgun Cases 50,000 cases
18 Bottles Business Cases 1,75,000 cases

What they filed

Q1 FY27: revenue up 22.5%, net profit up 36.9% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	62	58	32	37	46 −26%	64 +10%	35 +11%	45 +22%
Expenses	61	58	43	39	45	64	40	44
EBITDA	1	-0	-11	-3	1 +5%	-1 −31%	-5 +54%	0 +110%
Margin	1%	-1%	-34%	-8%	2%	-1%	-14%	1%
Other income	1	2	1	1	1	1	1	1
Interest	4	3	3	3	3	3	3	4
Depreciation	2	2	2	2	2	2	2	2
Profit before tax	-4	-4	-15	-8	-4 −11%	-5 −34%	-9 +35%	-5 +36%
Tax rate	-27%	-25%	-25%	-25%	-25%	76%	-26%	-26%
Net profit	-3	-3	-11	-6	-3 −14%	-9 −215%	-7 +36%	-4 +37%
EPS	-0.67	-0.64	-2.53	-1.34	-0.76	-2.01	-1.62	-0.84

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence

Capex ₹100 Cr Fundraise, not debt
- Hospitality project (boutique high-end resort) ₹70 Cr
- Brand building (RTD) ₹30 Cr
Hi, Gaurav here. That's correct. We are envisaging this INR 100 crore CAPEX, the large part of it is for the hospitality project, because the bulk of our CAPEX for our core business of wine is already done. ... But my expectation is out of the INR 100-odd crores, about 70% will go towards CAPEX and the balance 30% will go towards brand building, just strengthening the balance sheet with some cash and liquidity. ... We are thinking along the lines of doing a fundraise. So, we are still working on that idea. We are not intending to take any more substantial debt on our balance sheet.
Debt Gross ₹120 Cr Cost 10%

We have approximately INR 120 crores of total debt on our balance sheet, INR 37-odd crores is long-term debt, and the balance INR 83 crores is working capital and short term. Our average borrowing cost is approximately 10%.

Guidance & targets

Volume

Overall Growth Volume · current financial year · High confidence 12-15%

So, firstly, we are confident of achieving between 12% to 15% growth over the previous year in the current financial year.

— Gaurav Sekhri

Market Share

RTD Shotgun Market Share Market Share · next year · Medium confidence Double next year

From 6% today

In regards to our own projections, since we have only just launched and its early days, but we do expect our business, basis the response that we are getting and the repeat ratios to be double next year.

— Gaurav Sekhri

Market Growth

RTD Market Growth (Industry) Market Growth · year-on-year · High confidence 15-20%

So, as per a very recent article published in the newspaper, various agencies and consultants are predicting RTD market to grow at a clip of 15% to 20% year-on-year.

— Gaurav Sekhri

Revenue

Operational Efficiency Inflection Point Revenue · Medium confidence INR 210-215 crores

And I believe for Fratelli, that number is around INR 210 crores, INR 215 crores of top line. So, we are heading in that direction.

— Gaurav Sekhri
RTD Segment Contribution to Overall Revenue Revenue · next 2 to 3 years · Medium confidence 20%+

And next 2, 3 years we definitely expect a good growth in this segment, around 20% plus.

— Hemant Arora

Distribution

Shotgun State Expansion Distribution · end of FY '26 · High confidence 15 states

From 11 states today

The brand is present in 11 states with the expansion to 15 state target by end of FY '26.

— Hemant Arora
Total Touch Points Distribution · Medium confidence 28,000 to 30,000

From 25,000 today

Our estimation will be soon to reach between around 28,000 to 30,000 touch points.

— Hemant Arora

Capex

Hospitality Resort Start Work Capex · early 2026 · High confidence early 2026

We hope we can begin work in early 2026, and we hope that we will be able to open the resort in 2028.

— Gaurav Sekhri
Hospitality Resort Open Capex · 2028 · High confidence 2028

— Gaurav Sekhri

Market Normalization

Telangana Market Normalization Market Normalization · 1st December · High confidence 1st December

It will be normalized by 1st December, because all the licenses will be allotted by end of November. And from 1st December, the operation will be normalized and the impact in the top line is around 4% to 5%.

— Hemant Arora

What to watch in Q3 FY26

CAPEX breakdown for RTD brand building

next earnings call

Current Approx. 30% of INR 100 crores CAPEX

Target Specific allocation details

Why it matters

To understand the precise investment strategy for the high-growth RTD segment.

See, I think we will be able to give you more accurately in the next earnings call. We are still finalizing our budget. But my expectation is out of the INR 100-odd crores, about 70% will go towards CAPEX and the balance 30% will go towards brand building, just strengthening the balance sheet with some cash and liquidity.

Risks & concerns

Temporary disruption in Telangana market
high

Retail license transition in Telangana affected industry-wide volumes, causing a 4-5% impact on topline, but normalization is expected by December 1st.

On the market side, the temporary disruption in Telangana due to retail license transition affected industry-wide volumes during the quarter. With the transition now complete, we expect a more normalized movement in H2. ... the impact in the top line is around 4% to 5%.

Management acknowledged
Near-term industry headwinds
medium

The Indian wine industry has been facing some near-term headwinds, but innovation is driving the company forward.

As we look back at the first half of FY '26, the Indian wine industry has been facing some near-term headwinds. That said, our continued innovation is driving us forward.

Management acknowledged
FDA discussions and trade agreements (Australia, EU)
medium

Ongoing FDA discussions, including Australia agreement and EU negotiations, are being monitored, with the company preparing its business ahead of time.

We are also cautious of the ongoing FDA discussions, including the Australia agreement and the negotiations with the EU. We expect Indian government to not make any further concessions beyond what has been made to Australia, and we are already preparing our business ahead of time for this.

Management preparing for
Competition from low-value imported wines due to perception
low

While FTAs protect against low-value imports, there's a perception risk that imported wines, regardless of quality, could adversely impact the business, but management believes Indian wines have advantages.

And if there is a flood of imported wines at very low value, then that can possibly adversely impact the business because of perception, not for any other reason.

Management downplayed

Q&A highlights

7 direct

Revenue contribution from Telangana and Karnataka Direct

Telangana and Karnataka are a very high contributor for our business, around 20% contribution in our business. And that's why overall business impacted due to change in licensing policies.

Quantifies the impact of regional policy changes on overall revenue, highlighting market concentration risk.

Asked by Chetan Sharma

CAPEX allocation for RTD brand building Partial

See, I think we will be able to give you more accurately in the next earnings call. We are still finalizing our budget. But my expectation is out of the INR 100-odd crores, about 70% will go towards CAPEX and the balance 30% will go towards brand building, just strengthening the balance sheet with some cash and liquidity.

Indicates a significant portion of the planned CAPEX is for brand building, but specific RTD allocation is still being finalized, requiring a follow-up.

Asked by Chetan Sharma

Evolution of wine in can business Direct

Gaurav here, I would like to add that the sales for the wine in a can business or can sales are stable. They have not yet grown in any remarkable fashion. I must share that with you. And I think a large part of that is because we are the dominant players in this category. I think it would be good to see some other players also enter, so then category expansion happens.

Reveals that the wine-in-can segment, despite being a focus, has not seen significant growth domestically and needs broader market participation to expand.

Asked by Deepesh Sancheti

Funding for the hospitality project CAPEX Direct

In regards to CAPEX, the CAPEX will be undertaken by Fratelli. And most likely, we will get an operator to come and operate the property as hospitality is not really our core business or our area of expertise.

Clarifies that Fratelli will fund the CAPEX for the resort but plans to outsource operations, indicating a strategic focus on asset ownership rather than operational management in hospitality.

Asked by Deepesh Sancheti

Impact of FTAs on the Indian wine industry Direct

Firstly, in the U.K. FTA, Government of India has not made any concession for wine. Any concessions made is only on spirit. That's point number one. If we go by the FTA India has signed with Australia, there is protection for wines up to $5 value per bottle. The duty remains unchanged at 150%.

Provides crucial details on the current FTA landscape, reassuring that Indian wines are protected from low-value imported competition, mitigating a potential risk.

Asked by Manan Pamani

Maharashtra WIPS policy status Direct

So, this benefit is continued, and we are getting this benefit in this year also. And this policy is up to March '28.

Confirms the continuation of a beneficial state policy, providing clarity on a key operational support for the company.

Asked by Manan Pamani

Competitors in the RTD segment Direct

RTD segment, our product is called Shotgun, which has just been launched. Here, the market leader by a long shot is a product called Bro Code, which was launched at least 5 or 6 years ago. And everyone else, I think, are, in our view, regional and not really so relevant.

Identifies the primary competitor (Bro Code) and positions Fratelli's Shotgun as a strong contender with a perceived superior product and in-house manufacturing advantage.

Asked by Nitin

Size of the Luxury segment in wine Direct

You can say it's in the Luxury segment above INR 2,000 only Fratelli is available, then there is a product like Moët & Chandon sparkling category is there. But in the red and wine category, we are dominating. But yes, I think your math is right. The total category probably is about INR 50 crores for wines which are above the INR 2,000.

Quantifies the addressable market for the high-growth Luxury segment where Fratelli holds a dominant market share, providing context for future growth potential.

Asked by Nitin

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Detailed narrative

Q2 FY26 Financial Performance and Market Position

Fratelli Vineyards reported Q2 FY26 revenue of approximately INR 46 crores, broadly stable compared to INR 46.4 crores in Q2 FY25. The company achieved positive EBITDA of INR 1.47 crores, an improvement from INR 1.32 crores in the prior year, driven by a premium product mix and efficiency initiatives. Gross margins remained healthy at 79%, despite a slight dip from 80% in Q2 FY25. Fratelli now holds 1/3 of the Indian wine market, with its Luxury segment maintaining over 50% market share and growing 18% YoY.

Innovation and Market Expansion

The newly launched wine-based Ready-To-Drink (RTD) product, Shotgun, has shown promising traction, capturing 6% market share within six months of launch and is available in 11 states, with a target to reach 15 states by the end of FY26. The company also expanded its footprint into Chhattisgarh, bringing its total presence to 29 states and union territories. Exports contributed 3% of Q2 revenue, a significant increase from 1% last year, with new markets including Australia, Mauritius, and the Maldives.

Strategic Investments and Capital Allocation

Fratelli plans a CAPEX of INR 100 crores, with approximately 70% allocated to a new boutique high-end resort on its vineyard property, and the remaining 30% for brand building, particularly for the RTD segment. This CAPEX will be funded through a fundraise, avoiding additional substantial debt. The company's total debt stands at INR 120 crores, with INR 37 crores as long-term and INR 83 crores as working capital, at an average borrowing cost of 10%.

Market Dynamics and Regulatory Environment

The company faced temporary headwinds in the Indian wine industry, particularly a disruption in Telangana due to retail license transition, which impacted volumes and caused a 4-5% decline in topline. However, normalization is expected by December 1st. Management is closely monitoring FDA discussions and trade agreements (Australia, EU), noting that existing FTAs protect Indian wines from low-value imported competition. The Maharashtra WIPS policy, which provides benefits, has been extended until March 2028.

Operational Efficiency and Sustainability

Fratelli is focused on operational discipline and a premium debt portfolio to support long-term margin health. The company aims for 12-15% overall growth in the current financial year, expecting operational efficiencies to become visible as revenue approaches the INR 210-215 crore inflection point. Sustainability is a core principle, with 45% of energy requirements at the Akluj Winery now met through solar power, contributing to cost efficiency and environmental responsibility.

This is an AI-generated summary of a publicly available earnings call transcript.

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