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    Sula Vineyards Q1 FY27 earnings call

    SULA
    Fast Moving Consumer Goods·7 Aug 2026
    Management Summary

    Sula Vineyards Limited reported a 3% revenue growth in Q1 FY27, driven by strong performance in its Elite & Premium Own Brands and Wine Tourism segments. Profitability was impacted by higher blended grape costs and an adverse geographical mix, leading to a 5% decline in gross profit. The company is expanding its CSD presence and Wine Tourism offerings, including the acquisition of the former Chandon estate, while actively managing costs.

    Highlights

    5

    • Revenue grew 3% YoY to INR 121 crores, marking six consecutive months of positive sales growth.

    • Elite & Premium portfolio grew 6% in Q1, with its share in Own Brands expanding by 310 basis points to an all-time high of 78%.

    • Wine Tourism revenue grew 12% YoY to INR 15.5 crores, with room revenues increasing 21%.

    • Preliminary approval for 5 additional brand listings in CSD, expanding total approved wines to 14.

    • Completed acquisition of the former Chandon estate for INR 20 crores, renamed Domain RASA, with tasting room and banquet facilities already operational.

    Concerns

    4

    • Gross profit declined 5% YoY due to higher blended grape costs and adverse geographical mix.

    • Higher blended grape costs resulted in a ~150 basis point impact on margins, expected to persist for a couple of quarters.

    • Soft performance in the Economy & Popular portfolio due to unsustainable competitor discounts.

    • Karnataka market remained soft, with the entire wine industry experiencing degrowth in Q1.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹121 Cr+3%YoY
    2. 02Wine Tourism Revenue₹15.5 Cr+12%YoY
    3. 03B2C Wine Sales (Bottle Shops)₹10 Cr+7.0%YoY
    4. 04Gross Profit—-5%YoY
    5. 05Operating Costs Reduction—-3%YoY

    Segment breakdown

    Own Brands
    2% Growth
    Elite & Premium Portfolio
    6% Growth78% Share of Own Brands
    Wine Tourism
    12% Growth13% Contribution to Overall Revenue21% Room Revenues Growth
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Net ₹319 crores

    M&A

    Former Chandon estate (renamed Domain RASA)

    acquisition · closed · Consideration ₹NaN (undisclosed)

    Guidance & targets

    8
    CategoryTargetPriority
    Profitability
    EBITDA Margin
    Recover to last year's levels, then surpass
    		High
    Costs
    Blended Grape Costs
    Subside, fully normalize
    		High
    Costs
    Table Grape Prices
    Come down meaningfully, lower than harvest 2026 levels, <INR 20/kilo
    		High
    Costs
    Operating Costs
    Further efficiencies
    		High
    Distribution
    New Brand Listings in CSD
    Complete listing process for 5 new brands
    		High
    Revenue
    CSD Revenue Contribution
    Significantly more
    		Medium
    Market Performance
    Karnataka Market Performance
    Turn the corner
    		Medium
    Debt
    Net Debt
    Continue trending lower
    		High

    What to watch in Q2 FY27

    5

    Blended Grape Costs

    Q4 FY27
    CurrentImpacted margins by ~150 bps in Q1 FY27
    TargetExpected to subside

    Why it matters

    Key determinant of gross margin recovery.

    the higher blended grape cost is expected to subside📎 in Q4 FY27 and fully normalize from Q1 FY28 onwards, so the full impact will be felt in FY28 as the grape mix rebalances following harvest '27.

    Risks & concerns

    3
    RiskSeverity

    Higher Blended Grape Costs

    Impacted gross margin by ~150 bps in Q1, expected to persist for a couple of quarters. — Management acknowledged

    high

    Softness in Karnataka Market

    Entire wine category degrown in Q1 and H2 FY26 in this important market, but expected to turn in H2 FY27. — Management acknowledged

    medium

    Competition in Economy & Popular Portfolio

    Unsustainable discounts by competitors led to pressure and softer performance in this segment. — Management acknowledged

    medium

    Q&A highlights

    8

    “So, there's no point in crushing an excess amount of grapes and then almost giving it away. So, we are hopeful, but I must say that we cannot guarantee that. But it does look quite sure that the table grape prices are going to be at much lower levels than what we saw in harvest '26 when there was a huge spike, more than doubling of table grape prices compared to previous harvests.”

    Addresses a key cost driver and competitive dynamics, indicating potential margin relief in the future, but with a caveat on certainty.

    asked by Abneesh Roy

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Sula Vineyards Limited reported a 3% year-on-year revenue growth in Q1 FY27, reaching INR 121 crores, continuing the positive momentum from the end of FY26. This growth was primarily fueled by a 2% recovery in the Own Brands business and a double-digit expansion in Wine Tourism. The Elite & Premium portfolio, a key focus area, demonstrated robust growth of 6% and now constitutes an all-time high of 78% of Own Brands sales.

    02

    Profitability Challenges and Outlook

    Gross profit for the quarter declined by 5% year-on-year, primarily due to two factors: a ~150 basis point impact from higher blended grape costs and a ~200 basis point impact from an adverse geographical mix. Management indicated that the higher grape costs are a temporary phenomenon, expected to subside📎 by Q4 FY27 and fully normalize by Q1 FY28, with table grape prices anticipated to fall below INR 20/kilo, which should benefit the Economy & Popular portfolio.

    03

    Wine Tourism Expansion and Projects

    The Wine Tourism segment continued its strong performance, with revenue growing 12% year-on-year to INR 15.5 crores in Q1 FY27, driven by a 21% increase in room revenues and higher per-guest spending. The company completed the acquisition of the former Chandon estate for INR 20 crores, renaming it Domain RASA, with its tasting room and banquet facilities already operational. Winery operations at Domain RASA are slated to commence in Q4 during the 2027 harvest season, further enhancing Sula's tourism offerings.

    04

    Strategic Cost Management and Debt Reduction

    Sula Vineyards implemented strategic cost initiatives, resulting in a 3% year-on-year reduction in overall operating costs and a 6% reduction in employee benefit expenses. This helped mitigate the impact on EBITDA margins. The company also reported a 4% decline in interest costs, with net debt reducing to INR 319 crores by June 2026 from INR 345 crores in June 2025, and expects net debt levels to continue trending lower by the end of FY27.

    05

    Market Dynamics and Regional Performance

    While markets like Telangana, Haryana, Chandigarh, Exports, and CSD delivered strong double-digit growth, the Karnataka market remained soft, experiencing industry-wide degrowth in Q1 FY27. Management expects the Karnataka market to turn the corner in the second half of FY27. The company is also expanding its CSD presence, with preliminary approval for 5 additional brand listings, aiming to complete the process by Q3 FY27 and significantly increase CSD's revenue contribution in FY27 from 4% in FY26.

    06

    Seasonality and Future Outlook

    Management clarified the significant seasonality in their business, with Q3 typically accounting for nearly 40% of annual revenue, making Q1 and Q4 comparatively weaker. Despite the current challenges, the company expressed confidence in recovering to and surpassing last year's EBITDA margin levels before the end of FY27, supported by cost efficiencies and normalizing grape costs. They also expressed cautious optimism regarding the upcoming Kumbh Mela in Nashik in 2026/2027, hoping for a positive impact on tourism.

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