Sula Vineyards shares fall over 2% after a tepid listing at ₹361

• Shares of Sula Vineyards listed at ₹361 against the issue price of ₹357 per share.
• Shares of Sula Vineyards were expected to list at a discount, according to grey market trends.
• The market capitalisation of the company stood at ₹3,014 crore after listing.
• The Sula Vineyards IPO was subscribed 2.33 times, led by qualified institutional buyers.
  

Shares of Nashik-based Sula Vineyards, India’s largest wine producer and seller, have debuted on the stock exchanges at ₹4 premium, at ₹361 against the issue price of ₹357.

After opening at premium at 10:11 a.m, shares of the company fell over 2% to ₹349.90.

Earlier, grey market trends hinted that the shares of the company could list at a discount of up to ₹15, eroding the premium of up to ₹60 from earlier this month. GMP is the premium at which IPO shares are traded in the unofficial market before they are listed on the stock exchanges.

The market capitalisation of Sula Vineyards stands at ₹3,014 crore, according to BSE data.

Besides, positive stock market momentum on Thursday also supported the tepid but positive IPO opening.

At 9:51 a.m. Sensex was trading 172 points higher at 61,239 while Nifty50 was up 40 points at 18,250.

The IPO received decent demand from investors as the issue was subscribed 2.33 times.

The qualified institutional buyer portion was subscribed the most at 4.13 times. The portion reserved for retail was subscribed 1.65 times and that for non-institutional investors witnessed a subscription of 1.51 times.

This year, 34 IPOs made their stock market debut on the BSE mainboard. All except eight have given positive listing gains. Here are the top five IPOs with highest listing gains in 2022.
Source: BSE

Covid-19 impact resulted in a loss, but the company is back in the black
Sula Vineyards said in its draft red herring prospectus (DRHP) that it has consistently gained market share (on the basis of their total revenue from operations) from 33% in FY09 in 100% grapes wine category to 52.6% in FY21 in the Indian market.

However, the winemaker was severely impacted due to Covid-19 because of which it had delivered a loss of ₹15 crore in FY20.

“In the first half of calendar year 2020, Covid-19 spread to a majority of countries across the world, including India. The Covid-19 pandemic has had, and may continue to have, significant repercussions across local, national and global economies and financial markets,” said the company in DRHP.

Adverse climate conditions faced by farmers while harvesting is among key risks that would impact the quality of grapes, which is the primary raw material. The company is reliant on these third-party sellers (farmers) to supply grapes for its business operations.

“Furthermore, the unavailability of raw materials can also be caused by other conditions, such as pandemics, seasonality, inflation and general economic and political conditions, all of which are beyond our control,” said the company.

However, in FY22 its profits surged to ₹52 crore as against ₹3 crore in FY21.
Source: DRHP


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