Sula Vineyards IPO opened for public subscription on Monday, 12 December, and the issue will close on 14 December. The IPO price band has been fixed at Rs 340-357 per equity share. The offer is entirely an offer for sale (OFS) of up to 2.69 crore shares by selling shareholders. The company aims to raise Rs 960 crore at the upper price band. Ahead of the IPO, the company on 9 December garnered Rs 288.10 crore from anchor investors when it finalized the allocation of 80.70 lakh shares to anchor investors, at the upper end of the price band. Sula Vineyards shares are likely to debut on bourses on 22 December. Sula Vineyards IPO shares are commanding a grey market premium (GMP) of Rs 35-40 per share, according to people dealing in unlisted securities.

Should you subscribe to Sula Vineyards IPO?

“Sula has market leadership in India’s grape wine industry especially in premium brands. It enjoys high entry barriers and is well-placed to capture the industry growth. We like its focus on D2C model, premiumization and efforts on improving its operational efficiencies. The IPO is valued at P/E of 49x 1HFY23 annualized EPS. Given first of its kind listing in wine category, there could be fancy for the IPO. We suggest investors can Subscribe for listing gains.”

“Considering the higher share of high-margin segments in the revenues and focus on owned brand, the company would be able to expand its margin going forward. Its strong position in a high barrier and fast-growing segment would help it to gain further in terms of sales in the long run. We recommend to SUBSCRIBE for listing gains.”

“Sula vineyards Limited is an established market leader in the Indian wine industry with largest wine producer in India with the widest and innovative product offering supported by an efficient production mechanism largest wine distribution network and sales presence and secured supply of raw material with long term contracts exclusive to Sula and leader and pioneer of the wine tourism business in India. At upper price band, Sula vineyards limited is available at P/E 35.8x and market cap of Rs 30,058 million post issue of equity shares and return on net worth of 11.45%. We believe Sula vineyards limited IPO is fairly priced and recommend a “Subscribe- Long Term” rating to the IPO.”

“There are no comparable peers having product profile similar to Sula. The above peers are in alcoholic beverage (other than wine) market, thus considered only for benchmarking the demanded valuations. At higher price band, Sula is demanding a P/E multiple of 38.5x (to its TTM earning), which seems to be in-line to the peer average. Considering the lower wine penetration in the domestic market and expanding demographic factors like rising per capita income and expanding target population, we believe the domestic wine market is on the cusp of exponential growth. Sula being the largest producer & seller of wine is well-placed to capture future growth opportunities in the Indian wine market. Thus we assign a “SUBSCRIBE” rating for the issue.”

According to Canara Bank Securities’ IPO note, Sula Vineyards Limited is India’s largest wine producer with market leadership both in terms of value and volume across Elite, Premium, Economy (Rs 400-700) and Popular (<400>