Sula Vineyards (SULA) Q1 24/25 earnings summary

Executive summary

• Achieved highest-ever Q1 sales in Q1 FY25, with net revenue of INR 130 crore, up 10% year-over-year, driven by strong own brands and resilience despite election and heatwave headwinds.

• Maintained market leadership with over 60% share in premium wines and a diverse portfolio of 68 labels across 14 brands.

• Strategic shift to a third-party sales model for economy and popular brands in Maharashtra, showing promising early results.

• Continued focus on sustainability, with over 50% of annual energy needs met by solar and significant water usage reduction.

• Unaudited standalone and consolidated financial results for the quarter ended 30 June 2024 were approved by the Board on 7 August 2024.

Financial highlights

• Net revenue reached INR 130 crore, up 10% year-over-year; EBITDA at INR 35.2 crore, up 10.3% YoY; PAT at INR 14.6 crore, up 7% YoY.

• Gross margin improved to 76%, up 250 basis points year-over-year.

• Elite and Premium portfolio grew 8.6%, while Economy and Popular grew 24%, marking the first time in 8 quarters that Economy and Popular outpaced Elite and Premium.

• Wine tourism revenue declined 2% year-over-year, impacted by heatwave and road issues.

• Basic EPS improved to INR 1.73, up 6.8% YoY.

Outlook and guidance

• Management expects transitory headwinds to be behind, with optimism for stronger H2 performance and positive recovery for the rest of FY25.

• No specific revenue or margin guidance provided, but indications of better recovery and continued focus on premiumization.

• Recovery in wine tourism occupancies anticipated as road conditions improve and new projects launch.

• Management notes the seasonality of the business, with revenue, costs, and profits not accruing evenly over the year, making quarterly results not strictly comparable.