Sula Vineyards (SULA) Q3 24/25 earnings summary

Executive summary

• Own brands business achieved 11th consecutive quarter of growth, though Q3 growth was subdued due to urban consumption slowdown and election-related disruptions in Maharashtra, the largest market.

• Elite and premium portfolio reached an all-time high of 80.5% of own brands, growing 6% year-over-year, with flagship brands showing double-digit growth; non-core markets outside Maharashtra and Karnataka grew 8%.

• Wine tourism segment delivered record quarterly revenue of Rs. 16.4 Cr, up 12% year-over-year, with 81% occupancy and increased spend per visitor.

• SulaFest returned after five years, attracting over 10,000 attendees and boosting brand visibility; wine in cans format saw strong consumer response.

• Management expects a revival in growth and profitability, targeting significant earnings expansion in FY26.

Financial highlights

• Net revenue for Q3 FY25 was Rs. 217.5 Cr, nearly flat year-over-year; own brands revenue grew 1% YoY, elite and premium segment volume up 3%, value up 5.5%.

• Gross margin for Q3 FY25 was 62.4%, down 450 bps year-over-year, mainly due to lower WIPS credits and changes in distribution.

• EBITDA declined 26% to Rs. 53.9 Cr; EBITDA margin at 24.8%, impacted by lower WIPS and higher S&D expenses.

• Employee costs rose 11.5% (including ESOP costs); S&D and marketing expenses increased 16% due to expansion in non-core markets.

• Basic EPS for Q3 FY25 was Rs. 3.32, down 34.7% YoY.

Outlook and guidance

• Q4 expected to be in line with last year; FY26 targeted for significant earnings growth and margin improvement, with full realization of WIPS potential and new production capacity.

• Margins expected to recover 200-300 bps as S&D spend is moderated and revenue growth returns.

• Strategic focus on product launches, capacity expansion, and market penetration, including new markets and D2C business.

• SulaFest and wine tourism expansions anticipated to boost Q4 and FY26 revenues.