Sula Vineyards Q1 FY27 Earnings Call — Analysis (NSE: SULA)
Sula Vineyards reported Q1 FY27 revenue growth of 3% YoY to ₹121 Cr, with premiumization and wine tourism offsetting Economy & Popular weakness, while management guided EBITDA margin recovery to FY26 levels before end of FY27.
Result quality: stable — Steady quarter. Management sentiment: neutral.
The take
Q1FY27 Net revenue from operations ₹121 Cr ( +3% YoY ) . New guidance — Q4FY27 table grape procurement prices… less than ₹20 a kilo .
Results
Q1 FY27 net revenue rose 3% YoY to ₹121 Cr; Own Brands grew 2%, Elite & Premium grew 6% to a 78% share, Wine Tourism grew 12% to ₹15.5 Cr, but gross profit declined 5% on a ~150bps grape-mix drag and ~200bps adverse regional mix, and net debt stood at ₹319 Cr versus ₹345 Cr a year ago.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Net revenue from operations | ₹121 Cr | +3% | yoy · Q1FY27 · vs ₹118 Cr in Q1FY26 |
| Own Brands revenue growth | 2% | +2% | yoy · Q1FY27 · demand trends normalizing across most markets |
| Elite & Premium revenue growth | 6% | +6% | yoy · Q1FY27 · share in Own Brands at 78%, +310bps |
| Wine Tourism revenue | ₹15.5 Cr | +12% | yoy · Q1FY27 · approximately 13% of overall revenue |
| B2C wine sales from own facility bottle shops | ₹10 Cr | +7% | yoy · Q1FY27 |
| Gross profit | -5% | -5% | yoy · Q1FY27 · grape mix and adverse geographical mix |
| Grape mix impact on gross margin | ~150bps | −150bps drag | none · Q1FY27 · higher proportion of wine grapes in inventory mix |
| Adverse geographical mix impact on gross margin | ~200bps | −200bps drag | none · Q1FY27 · lower-margin markets outpaced higher-margin Maharashtra/Karnataka |
| Operating expenses | -3% | -3% | yoy · Q1FY27 · cost optimization initiatives |
| Net debt | ₹319 Cr | point_in_time · Jun-26 · vs ₹345 Cr as on Jun-25 | |
| WIPS outstanding receivable | ₹88 Cr | +₹2 Cr | sequential · Jun-26 · vs ₹86 Cr at end of Mar-26; ~₹80 Cr after July payout |
Guidance
Management guided EBITDA margin recovery to FY26 levels before end of FY27 and expects the elevated grape-cost impact to subside in Q4 FY27 and fully normalize from Q1 FY28 as table-grape prices moderate.
What management committed to
- Management expects Sula's EBITDA margin to recover to FY26 EBITDA margin levels before the end of FY27. — FY27
- Management expects the higher blended grape-cost impact on margins to subside in Q4 FY27 and fully normalize from Q1 FY28 onwards. — Q1FY28
- Management expects table grape prices to moderate to less than INR 20 per kg in the next [harvest 2027] procurement season. — less than INR 20 a kilo, Q4FY27
- Management remains confident that Telangana's positive revenue momentum will continue in Q2 FY27. — Q2FY27
- Management expects Karnataka market to turn the corner in H2 FY27. — H2FY27
- Sula expects to complete the CSD listing process for five additional approved brand listings by Q3 FY27. — five additional brand listings, Q3FY27
- Sula expects to introduce the new CSD wines before the end of FY27. — new wines, Q4FY27
- Management expects CSD to contribute significantly more than the 4% of revenues it contributed in FY26 in FY27.
Key themes
Premiumization and wine tourism-led recovery
Operational commentary
- Premiumization advanced: Elite & Premium reached 78% of Own Brands, up 310bps YoY; The Source and RASA now account for 16% of Own Brands sales.
- CSD expansion: preliminary approval received for 5 additional brand listings, taking approved wines to 14 from 9; listings targeted by Q3 FY27 and launch before FY27-end.
- Wine Tourism pipeline: The Haven third resort ramping, overall resort occupancy 63% and >70% excluding The Haven; events pavilion on track for Q3 FY27.
- Domaine RASA acquisition: former Chandon estate acquired for ₹20 Cr; tasting room, bottle shop, and banquet already operational; winery operations targeted for Q4 FY27.
- Distribution gains: Telangana grew over 50% YoY after December 2025 route-to-market resolution; Haryana, Chandigarh, Exports, and CSD also delivered strong double-digit growth.
- New label momentum: Sula Merlot and Sula Muscat Blanc grew over 100% YoY from a small base, with production and distribution being ramped up.
- Economy & Popular remains pressured by unsustainable competitor discounting, and Sula is consciously prioritizing Elite & Premium.
- Cost outcomes: operating expenses reduced 3% YoY and employee benefit expenses reduced 6% YoY, partially offsetting gross-margin pressure.
Analyst Q&A
Q. Given expected softer raw material in FY28, has competition behaved rationally in the past, given Sula has 50%+ share in mass wine?
Rajeev Samant said production volumes of these wines have not increased much and in some cases are declining as players find it unsustainable; table grape prices are likely much lower after the harvest 2026 spike, but he cannot guarantee competitor behavior.
Q. Revenue has been almost flat for 3-4 years; is the wine industry also flat, and do you have long-term plans to diversify into white spirits?
Rajeev Samant said the wine industry has seen consolidation with low single-digit growth; Sula has no white spirit plans right now, but hinted at a 'very interesting new segment' without giving specifics.
Q. Would gross margin have been better if the grape mix had remained the same, and what is the upside from reversing this mix?
Rajeev Samant confirmed gross margin would have been better, while Mandar Kapse said future upside is too early to quantify; Rajeev added table grape prices could moderate to less than ₹20 per kg and the negative impact should be absent from Q4 FY27.
Q. Why are other alco-bev companies seeing benefits from Maharashtra and Karnataka excise policies while Sula says these markets remain weak?
Rajeev Samant explained the policy changes are specific to spirits, wine duties have not changed 'not a single rupee', and beer price cuts plus a hot summer pulled consumption away from wine.
Q. What is the capital employed in Wine Tourism and what is the typical capex per room?
Mandar Kapse said Wine Tourism is not separately capitalized but has better EBITDA margin than standalone wine; Rajeev Samant said recent resort additions were asset-light via management contracts, so no clear capex-per-room figure was available.
Q. Why do Q4 and Q1 revenues always decline seasonally?
Rajeev Samant explained clear seasonality: Q3 contributes close to 40% of revenue, Q4 is normally second, and Q1 is usually far behind.
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