Sula Vineyards (SULA) Q1 25/26 earnings summary

Executive summary

• Q1 performance was impacted by urban demand softness and a temporary disruption in Maharashtra due to an excise duty hike, but market share gains and strong growth in the elite and premium wine segment were achieved, with The Source brand recording robust double-digit growth.

• Wine tourism business achieved record revenue of Rs. 13.7 Cr, up 122% year-over-year, with over 20% growth, record resort occupancy, and increased spend per guest, supported by improved accessibility from the new Mumbai-Nashik highway section.

• New product launches, including India's first still Muscat and low-alcohol wine, Muscat Blanc, and expanded CSD portfolio, are expected to drive future growth.

• Several new wine tourism facilities and a 30-key resort expansion are set to open in Q2, enhancing capacity and offerings.

• Unaudited standalone and consolidated financial results for the quarter ended 30 June 2025 were approved by the Board on 6 August 2025.

Financial highlights

• Q1 revenue from operations stood at INR 118.3 crores, up 17.9% year-over-year, with own brands contributing INR 102.3 crores, a 10.8% increase year-over-year.

• Gross profit was Rs. 89.8 Cr, up 14.6% year-over-year, but operating EBITDA declined 46.1% to Rs. 18.3 Cr due to higher COGS and lower gross profit.

• PAT dropped 71.5% year-over-year to Rs. 1.9 Cr, with PAT margin at 1.6% versus 5.7% last year.

• Gross margin decreased by 593 bps to 75.9%; operating EBITDA margin fell by 1,096 bps to 15.5%.

• D2C wine sales from tourism properties grew 11% year-over-year to INR 9 crores.

Outlook and guidance

• The excise duty hike on spirits is expected to make wine more competitive in Maharashtra, benefiting the company in the long term.

• New wine tourism openings, cost efficiency initiatives, and cellar capacity expansion by 1 Mn liters to 19.2 Mn liters by end of FY26 at 33% lower capex are expected to improve operating margins.

• CapEx is expected to moderate to around INR 35 crores annually, down from INR 50-60 crores in previous years.

• Management remains focused on delivering healthy operating profit growth for the rest of FY26.