Sula Vineyards (SULA) Q3 25/26 earnings summary

Executive summary

• Q3 was the most challenging quarter since listing, with significant revenue and profitability pressure due to a one-time destocking in Karnataka to right-size inventory and strengthen working capital.

• Revenue from operations for Q3 FY26 was INR 195.7 crore, down 9.7% year-over-year, primarily due to one-time destocking in Karnataka; excluding this, revenue was flat YoY.

• Wine tourism delivered robust 34% year-on-year growth in Q3, posting record revenue of INR 22 crore, driven by strong footfall and the launch of a new resort.

• The company gained significant market share in the elite and premium wine segment across key markets.

• Unaudited standalone and consolidated financial results for the quarter and nine months ended 31 December 2025 were approved and released, with auditor review confirming compliance and no material misstatements.

Financial highlights

• Q3 revenues were significantly impacted by a one-time destocking in Karnataka, leading to a revenue decline of INR 21 crore in that state compared to last year.

• Own Brand revenue for Q3 FY26 was INR 169.5 crore, down 12.9% YoY; excluding destocking, revenue was flat YoY.

• For the first nine months, revenues stood at INR 454 crore, down 5% year-on-year, with own brands' revenues declining 7%.

• Wine tourism revenues for the first nine months reached INR 49 crore, up 22% year-on-year.

• Gross margin for Q3 FY26 was 59.7%, down 269 bps YoY, mainly due to lower contribution from Karnataka.

• Q3 EBITDA declined 40% year-on-year to INR 32 crore, with margin contracting to 16.3% from 24.5%.

• PAT for Q3 FY26 was INR 9.1 crore, down 67.6% YoY, with PAT margin at 4.6% versus 12.9% last year.

• A one-time exceptional charge of INR 1.70 crore was recognized for impairment of certain yacht brands.

Outlook and guidance

• No further material destocking is anticipated; own brands are expected to return to growth in the coming quarters as demand improves.

• Demand conditions have improved across key markets except Bengaluru; strong recovery expected in Telangana and Maharashtra.

• Wine tourism is projected to sustain strong momentum, with further expansion and investment planned, including a new Nashik project.

• Margins are expected to improve and gradually revert to normalized levels.

• The business is subject to seasonality, with revenue, costs, and profits not accruing evenly over the year, making quarterly results not strictly comparable.