Sula Vineyards

Sula Vineyards delivered a strong Q4 FY26, with revenue growing 7% year-on-year to INR 142 crores, reversing a challenging trend. This growth was primarily fueled by improved traction in own brands, which grew 5% year-on-year, and a robust performance in the Wine Tourism business. The elite and premium portfolio led the own brands growth with double-digit expansion, particularly driven by The Source and RASA. Regionally, Telangana, UP, and Kerala showed robust growth, while key markets like Maharashtra and Karnataka also saw visible demand improvement.

The Wine Tourism segment continues to be a powerful growth engine, achieving a 17% YoY revenue growth in Q4 and crossing the INR 100 crore mark for the first time in FY26. Footfalls increased by 11% in Q4, with over 4 lakh visitors for the full year FY26. The addition of The Haven by Sula expanded room capacity by 50% to 154 keys, maintaining healthy occupancy levels above 70% in Q4. The company plans to earmark the lion's share of its capex over the next three years for further expansion in this segment, with FY27 Wine Tourism capex expected to be three times that of winery capex.

Despite top-line growth, Q4 EBITDA was slightly lower YoY, and gross profit declined 3% YoY. This was attributed to a higher blended grape cost, reflecting an increased mix of more expensive wine grapes, and a one-time^📎 gain in Q4 FY25. However, the company implemented decisive measures to optimize operating costs, resulting in a 3% YoY reduction in operating expenses. This led to a sequential improvement of 200 basis points in EBITDA margins in Q4 compared to Q3, demonstrating the effectiveness of cost control initiatives.

Sula Vineyards' capex for FY26 stood at approximately INR 25 crores, with regular capex for FY27 expected to be lower, excluding the Chandon acquisition. Net debt at the end of FY26 was INR 280 crores, a slight reduction from INR 285 crores last year, with a comfortable net debt-to-EBITDA ratio below 3x. The company signed a binding agreement to acquire Chandon's 19-acre estate in Dindori, Nashik, for INR 20 crores, pending regulatory approvals, to further expand its Wine Tourism footprint. A final dividend of INR 2 per share was recommended.

The company noted an improvement in demand across key markets, with UP showing over 50% growth in FY26 and nearly 100% in Q4, anticipating another bumper year in FY27 due to new policy changes. Sula plans to implement price hikes of 2% to 3% annually in free pricing states, acknowledging potential pressure from packing material costs. However, for wines priced above INR 1,200, the company will be cautious with price increases due to upcoming duty reductions on EU wines.

Sula Vineyards made significant progress in its sustainability efforts, with the share of renewable energy in its total energy mix increasing to 75% in FY26. The company aims to further increase this to over 80% by investing in battery energy storage systems. This focus on renewable energy is expected to provide resilience against uncertain fuel and power costs. Additionally, the company is scaling up production of four key wines by approximately 40% in FY27 due to strong demand and sell-out in FY26.