Sula Vineyards Fails To Enthuse Investors, Makes Weak Stock Market Debut

The country's largest wine maker, Sula Vineyards, failed to enthuse investors on its stock market debut as it opened for trading at Rs 358 per share against its initial public offering (IPO) price of Rs 357 per share on the BSE. The stock opened at Rs 361 on the National Stock Exchange but went below IPO price later in the day.

Sula Vineyards stock price fell as much as 5.15 per cent to hit an intraday low of Rs 338.60.

The Nashik-based wine maker sold shares in the price band of Rs 340-357 per share in the IPO which ended on December 14. The company raised Rs 960 crore from the IPO which was purely an offer for sale by its promoters and investors.

Founder and CEO Rajeev Samant, and investors such as Cofintra, Haystack Investments Limited, Saama Capital III, Ltd, SWIP Holdings Limited, Verlinvest SA and Verlinvest France SA offloaded shares in the IPO.

The IPO was subscribed 2.33 times and was in high demand among the Qualified Institutional Buyers (QIBs) as the portion reserved for them was booked 4.13 times, Portion set aside for Non Institutional Investors (NIIs) was subscribed 1.51 times and shares set aside for retail investors was booked 1.65 times.

The company had reserved 50 per cent of shares in the IPO for QIBs, 15 per cent for NIIs and 35 per cent for retail investors.

Sula Vineyards has been recognised as the market leader across wine variants, including red, white and sparkling wines. The company distributes wines under a bouquet of popular brands such as Sula (its flagship brand), RASA, Dindori, The Source, Satori, Madera & Dia.

“It is the largest wine producer with a wine tourism business. It enjoys the benefit of high entry barriers and has the largest wine distribution network and sales presence. Its financial performance is also improving. This issue of Sula Vineyards had a price to earnings (P/E) valuation of 54.67, which seems fully priced; the issue, however, was a complete offer for sale, and a low promoter holding is also a concern. So, allottees who applied for the public offering for listing premium are advised to maintain their stop loss at Rs 350 and wait for further upside till Rs 380,” Pravesh Gour, senior technical analyst at  Swastika Investmart.