Q1 2027 Sula Vineyards Ltd Earnings Call Transcript
Key Points
- Sula Vineyards Ltd (BOM:543711) reported six consecutive months of positive sales growth, with Q1 FY27 revenue up 3% year-on-year, signaling a return to consistent growth.
- The elite and premium portfolio grew 6% in Q1, with its share of own brands reaching an all-time high of 78%, driven by strong double-digit growth from flagship brands The Source and Rasa.
- Wine tourism revenue grew 12% year-on-year to INR 15.5 crores, contributing 13% of total revenue, with resort occupancy (excluding The Haven) at over 70%.
- The company received preliminary approval for five additional brand listings in CSD, expected to boost CSD sales significantly, which contributed 4% of FY26 revenue.
- Operating costs were reduced by 3% year-on-year in Q1, and the company expects EBITDA margins to recover to last year's levels before the end of FY27.
- The acquisition of the former Shandron estate (renamed Domaine Rasa) was completed at an attractive price, with tasting room and banquet facilities already operational, enhancing wine tourism and production capacity.
- Sula Vineyards Ltd (BOM:543711)'s economy and popular portfolio continued to face pressure due to unsustainable competitor discounting, moderating overall own brands growth.
- Gross profit declined 5% year-on-year in Q1, impacted by a 150 basis point increase in blended grape costs due to a shift towards wine grapes in the procurement mix.
- Adverse geographical mix, with strong growth in lower-margin markets like Telangana and Haryana, reduced gross margin by approximately 200 basis points.
- Karnataka, a key market, remained soft, with the entire wine category experiencing degrowth, though the company expects a turnaround in the second half of FY27.
- The higher grape cost impact is expected to persist for the next couple of quarters, with normalization only expected from Q4 FY27 onwards.
- Wine tourism's new resort, The Haven, had a low occupancy of 43% in Q1, which is expected to weigh on profitability until it scales up.
Ladies and Gentlemen, good day and welcome to the Sula Vineyards Limited Q1 FY27 Earnings Conference Call. (Operator Instructions) I now hand over the conference to Mr. Mandar Kapse, IR Head at Sula Vineyards. Thank you and over to you, sir.
Thanks, [Pari]. Good afternoon, everyone.
On behalf of the management team at Sula, I would like to welcome you all to the Q1 FY27 earnings call of Sula Vinayas.
Today on the call with us, we have from the management team, Mr. Rajeev Samant, founder and senior, and Ms. Rinku More, CFO.
They will take us through the Q1 performance and answer your question. As always, we'll kick off the call with Rajeev sharing his thoughts on the operating environment and business performance, which will be followed by Rinku taking us through the financial performance in greater detail, and then we'll open the forum for Q&A.
Before we proceed, I would just like to draw your attention to the Safe Harbor statement regarding the forward
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