FratelliVineyard — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Fratelli Vineyards Limited reported a strong Q3 FY26, driven by healthy revenue growth, significant margin expansion, and robust performance in its luxury segment. Despite regulatory challenges impacting the first half, the company saw normalization and recovery in Q3. Strategic initiatives like new product launches and expansion of the RTD portfolio are contributing to growth, while the company navigates the evolving market dynamics, including the India-EU Free Trade Agreement.

Highlights

  • Net revenue from operations for Q3 FY26 was INR 65 crores, reflecting an 8% growth compared to Q3 FY25.

  • EBITDA for Q3 FY26 increased to INR 5.5 crores from INR 1.6 crores in Q3 FY25, with margins improving to 8.6%.

  • The luxury segment delivered a revenue growth of 13% in Q3 and 20% for the 9-month period.

  • J'NOON, a flagship brand, reported a strong growth of 34% during Q3 and 53% on a year-to-date basis.

  • The premium and above category contributed approximately 73% of the bottle business revenue for the 9 months.

  • RTD brand Shotgun is on track to reach close to 100,000 cases and over INR 20 crores in revenue by March 31, 2026.

  • The company's domestic wine market share remained at approximately 31% for the 9-month period.

  • A one-time write-off of approximately INR 5 crores for a long overdue receivable was made, with INR 4 crores realized and INR 50 lakhs remaining to be recovered within FY26.

Key financials

2 periods

Q3

  • Net Revenue
    ₹65 Cr
    YoY +8%
  • Gross Profit
    ₹48.8 Cr
    YoY +8.4%
  • Gross Margin
    76%
  • EBITDA
    ₹5.5 Cr
    YoY +243.8%
  • EBITDA Margin
    8.6%
  • PBT
    ₹0.1 Cr

9M

  • Net Revenue
    ₹147 Cr
  • Gross Margin
    78%
  • EBITDA
    ₹4.7 Cr

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue62 58 32 37 46 −26%64 +10%35 +11%45 +22%
EBITDA1 -0 -11 -3 1 +5%-1 −31%-5 +54%0 +110%
Net profit-3 -3 -11 -6 -3 −14%-9 −215%-7 +36%-4 +37%
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.

Segment breakdown

  • Luxury Segment
    0.13 decimal_fraction Revenue Growth (Q3)0.2 decimal_fraction Revenue Growth (9M)
  • J'NOON
    0.34 decimal_fraction Growth (Q3)0.53 decimal_fraction Growth (YTD)
  • Sette
    0.05 decimal_fraction Growth (Q3)0.1 decimal_fraction Growth (YTD)
  • Premium and Above Category
    0.73 decimal_fraction Contribution to Bottle Business Revenue (9M)-0.1 decimal_fraction Decline (9M)0.01 decimal_fraction Growth (Q3)
  • Luxury Segment (above INR 2000 MRP)
    0.07 decimal_fraction Contribution to Overall Revenue
  • Premium Segment (INR 550-1000)
    -0.13 decimal_fraction Decline (9M)

Capital allocation

high confidence
  • Capex Capex disclosed
    • Vineyards infrastructure and plant and machinery
    For 9 months FY '26, we incurred a total capex of approximately INR10 crores, primarily towards vineyards infrastructure and plant and machinery. These investments are aimed at strengthening our future readiness.
  • Liquidity Liquidity disclosed A one-time write-off of approximately INR 5 crores for a long overdue receivable was made, with INR 4 crores realized. The remaining INR 50 lakhs is expected to be recovered within FY26.
    One important update. In the holdco level, Fratelli Vineyards, we have taken a onetime write-off of approximately INR5 crores to settle a long overdue receivable by realizing approximately INR4 crores. Post this, total receivables remaining are only approximately INR50 lakhs in the holdco and the same will be recovered within FY '26.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY27 · High confidence 10-12%
    So I believe going forward, you can expect Fratelli to operate at around -- maybe around 10% to 12% EBITDA margin can be expected in the immediate future.

    — Gaurav Sekhri

  • EBITDA Margin Profitability · Next Financial Year · High confidence 10%
    On the margin side, we have already given that information. We will be targeting about 10% EBITDA for next financial year.

    — Aditya Sekhri

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 7%
    So the outlook for the year will be to end at roughly 7% revenue growth and with a far better Q4.

    — Aditya Sekhri

  • Shotgun Revenue Contribution Revenue · FY26 Year-End · High confidence INR 20 crores
    But as I mentioned, we are on track to hit 100,000 cases with a revenue contribution of more than INR20 crores by -- of INR20 crores by year-end.

    — Aditya Sekhri

Ad Spend

  • A&P Investments as % of Sales Ad Spend · Next Years · High confidence 7-8%
    So we see it normalizing between 7% to 8% over the next years. That's the plan.

    — Aditya Sekhri

Volume

  • Shotgun Case Sales Volume · FY26 Year-End (March 31, 2026) · High confidence 100,000 cases
    We remain confident of reaching close to 100,000 cases by the year-end on 31st March '26.

    — Gaurav Sekhri

Receivables

  • Receivables Recovery Receivables · FY26 · High confidence INR 50 lakhs
    Post this, total receivables remaining are only approximately INR50 lakhs in the holdco and the same will be recovered within FY '26.

    — Gaurav Sekhri

What to watch in Q4 FY26

FY26 Revenue Growth

Next quarter (Q4 FY26 results)
Current 8% growth in Q3, ~INR 147 crores for 9M
Target 7% for full FY26, with a 'far better Q4'

Why it matters

To verify the company's recovery from H1 regulatory disruptions and overall business momentum.

So the outlook for the year will be to end at roughly 7% revenue growth and with a far better Q4.

Risks & concerns

  • Regulatory Disruptions

    medium

    Regulatory disruptions in Maharashtra, Uttarakhand, and Telangana impacted sales in H1 FY26, with Telangana sales temporarily impacted by retail license expiry.

    Management acknowledged

  • Increased Competition from India-EU FTA

    medium

    The FTA is expected to narrow the price gap between imported European wines and local brands, potentially increasing competitive intensity in premium categories, though the full impact will unfold progressively.

    Management acknowledged

  • High Brand Building and Promotional Spend

    low

    The company currently spends around 8% of its top line on brand building and promotions, which is higher than desired and impacts EBITDA conversion, but is seen as necessary for a young brand.

    Management acknowledged

  • Harvest Quality due to Heavy Rains

    low

    Heavy rains during the season posed a challenge for Harvest 2026, but the vineyard performance is strong, delivering good yields and high-quality grapes due to experienced team management.

    Management downplayed

Q&A highlights

7 direct
Telangana Impact and State-wise Revenue Contribution Direct
So Telangana approximately is still despite all the challenges that have had, they have been roughly about 11%, right? Just give us a second, we'll just confirm this, please. So roughly the contribution is about INR15 crores for the year.

Provides insight into the geographical revenue distribution and the impact of regulatory challenges in a key state.

Asked by Chetan from Systematix Group

India EU FTA Impact on Premium Wine Segment Direct
See, our math shows that a wine which is at EUR2.5 per bottle, even with the new FTA regulations kicking in, it will land on Indian shelves closer to INR2,000 retail. That's point one. Now we do have our brands like Sette and J'NOON, which currently price themselves higher than this sort of cut-off number. And I had mentioned in my opening remarks that we have seen excellent growth in both of them in this financial year.

Addresses a critical strategic concern regarding increased competition from imported wines due to FTA and management's confidence in their premium brands.

Asked by Chetan from Systematix Group

Gap between Gross Profit Margins and EBITDA Direct
See, our most of the costs are in line with some of our competition to the best of our ability, the ones whose records are available publicly for us to compare. Things like cost of goods, etcetera, are very much in check. We do tend to spend more in brand building and brand investments versus competition. We are at around 8% of our top line. I think that is one key factor.

Explains the factors contributing to the lower EBITDA despite healthy gross margins, primarily due to brand building and promotional expenses.

Asked by Girish Kumar from ValPro

Contribution and Growth of Premium Brands Direct
So premium and above brands contribute more than 70% of our revenue. That's been the case for us for quite some time and will continue to remain the same. The premium and the super premium segment for the 9-month period for us saw a moderate decline. It was roughly approximately around 10% for the year. And that was mainly, as I had mentioned earlier, led to a lot of regulatory aspects through the 9-month period. However, if you see for quarter 3, this has been normalized, and it saw a much larger recovery with a 1% growth for the quarter 3.

Clarifies the significant contribution of high-value segments and explains the reasons for their performance fluctuations.

Asked by Girish Kumar from ValPro

Distribution Channel Breakdown Direct
So for us, it's roughly 65% coming in from the retail channel and 35% coming from the on-trade channel. This is for our bottles business. However, with the launch of Shotgun, our retail contribution now will continue to rise and go north of 70% in the subsequent year.

Provides insight into the company's sales strategy and the expected shift in channel mix with the growth of RTD products.

Asked by Girish Kumar from ValPro

Wine Tourism Initiative Update Partial
Gaurav Sekhri here. On the hospitality front, we are -- we have signed a term sheet with an operator. We are now negotiating a definitive agreement and working on other plans for making the funds available as well as the design parallelly. I think it will be a bit premature. I would prefer to wait and tell you the timelines in the next 1 or 2 quarters.

Gives an update on a new strategic business vertical, indicating progress but also a lack of immediate concrete timelines.

Asked by Harshita Maheshwari from InVed Research

UP Market and FTA Impact on Luxury Segment Direct
UP has been one of the fastest-growing markets for the Indian wine industry for the last 3 years, especially post COVID, and it contributes approximately 6% of our overall revenue at the moment. The policy for us, the way it comes into play, we'll get a better idea in the next 15 to 20 days as we get towards the start of the next year. But currently, all the industry momentum and the work done in UP looks very promising. So for us, as I mentioned already, the luxury segment contributes roughly 7% of our overall revenue. That comes into any of our products above INR2,000 MRP. The FTA, which will get implemented eventually, will impact Indian wines above an MRP of INR2,000.

Addresses the significance of the UP market and reiterates the company's strategy and confidence in the luxury segment despite potential FTA impacts.

Asked by Nitin

Flat Revenue for 9M FY26 and Growth Outlook Direct
No, fair enough. I think your concern is we respect that. See, firstly, where are we today and how we perform today, I think let's put it in perspective. We have grown -- while we have not grown 9-month basis, our Q3 performance this year versus Q3 performance last year, we have started seeing the green shoots of growth again. So I would like to think that this trend will continue. That's point number one. I think in terms of growth levers, consider this, our luxury business has grown very handsomely in this financial year. Our top-selling wine or not top selling, but the most expensive wine from our portfolio, J'NOON, has grown almost 50%, 5-0.

Challenges management on the flat 9M revenue and seeks clarity on future growth drivers, to which management points to Q3 recovery and strong luxury/RTD performance.

Asked by Kaustav Bubna from Business Money Solutions

2 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Performance and Margin Expansion

Fratelli Vineyards reported a healthy Q3 FY26 with net revenue from operations growing 8% year-on-year to INR 65 crores. This growth was accompanied by significant margin improvement, with EBITDA increasing to INR 5.5 crores from INR 1.6 crores in Q3 FY25, resulting in an EBITDA margin of 8.6%. The company also achieved a positive PBT of INR 0.1 crores, turning profitable compared to a loss in the previous year, driven by operating leverage and disciplined cost management.

Robust Growth in Luxury and Premium Segments

The luxury segment demonstrated strong momentum, achieving 13% revenue growth in Q3 and 20% for the nine-month period. Flagship brands like J'NOON saw exceptional growth of 34% in Q3 and 53% year-to-date, while Sette grew 5% in Q3 and approximately 10% year-to-date. The premium and above category remains a key contributor, accounting for 73% of bottle business revenue for the nine months, reflecting the company's consistent focus on high-value offerings.

New Product Launches and RTD Business as Growth Drivers

In line with its premiumization strategy, Fratelli launched Fratelli Brut to strengthen its presence in the super-premium sparkling wine segment. The ready-to-drink (RTD) portfolio, particularly Shotgun, is emerging as a significant growth driver, expanding its distribution to 18 states and approximately 7,000 outlets. The company is confident of reaching 100,000 cases and over INR 20 crores in revenue for Shotgun by the end of FY26.

Navigating Regulatory Headwinds and India-EU FTA

The company faced regulatory disruptions in H1 FY26 in markets like Maharashtra, Uttarakhand, and Telangana, which impacted sales. However, Q3 showed signs of normalization. Management is closely monitoring the India-EU Free Trade Agreement, which is expected to gradually reduce import duties on European wines. While this may increase competition in certain premium categories, Fratelli believes its product quality, brand strength, and market share (31% domestically) will enable it to compete effectively.

Strategic Investments and Operational Efficiency Focus

Fratelli incurred approximately INR 10 crores in capital expenditure during the nine-month period, primarily for vineyards infrastructure and plant and machinery, positioning the company for future scale and efficiency. The management's ongoing emphasis is on strengthening operating leverage, improving efficiencies, and extracting greater value from existing infrastructure to support sustained operating performance. The company also addressed a one-time write-off of INR 5 crores for a long-overdue receivable, with INR 4 crores realized and the remaining INR 50 lakhs expected to be recovered within FY26.

Wine Tourism Initiative Progress

The company provided an update on its wine tourism initiative, confirming that a term sheet has been signed with an operator for a luxury resort property at its vineyards. While timelines are still being finalized and are expected to be shared in the next 1-2 quarters, the project aims to enhance brand building and offer ex-cellar door sales, contributing to the overall business beyond typical hospitality revenues.

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