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Sula Vineyards Q1 FY25 Earnings Conference Call Summary
Submission Details • Date of submission: August 13, 2024 • Compliance: Submitted transcript to National Stock Exchange of India and BSE • Call date: August 8, 2024 • Participants: CEO Rajeev Samant, COO Karan Vasani, CFO Abhishek Kapoor
Financial Highlights • Sales Performance • Highest-ever first quarter sales: INR 130 crores (10% increase YoY) • Growth despite challenges: national elections and adverse weather • Strong performance in smaller markets and 50% growth in CSD segment • 20% growth in premium portfolio due to Source collection launch
• Revenue and Margins • 10% YoY increase in operating revenue • Gross margins improved to 76% • EBITDA rose 10% to INR 35 crores (27% margin) • Profit after tax increased by 7% to INR 14.6 crores
Operational Updates • Expectations for a healthy grape harvest • Progress on bottling operations and low-cost cellar project • Shift to third-party sales model for economy brands in Maharashtra
Q&A Highlights • Distribution Model • New "super distributor" strategy in Maharashtra showing early positive results
• Concerns Raised • Stagnant value growth and volume decline attributed to national elections and local incidents • HoReCa segment contributes about 30% of revenue
• Future Outlook • Positive outlook for FY25, but no specific guidance provided • Potential benefits from Pernod's sale of its wine business, but advised caution
Additional Insights • Shift towards premiumization positively impacting gross margins • Promoter stake reduction due to personal financial needs, not lack of confidence • High conversion rate of wine tourism visitors purchasing products • Plans to increase capacity utilization by 9% for upcoming harvest
Conclusion • Emphasis on long-term growth strategy despite quarterly fluctuations • Optimism for recovery and future growth in the wine market
Sula Vineyards Limited Q4 FY24 Earnings Conference Call Summary
Key Management and Financial Performance • Date of Call: May 9, 2024 • Management Present: CEO Rajeev Samant, COO Karan Vasani, CFO Abhishek Kapoor • Financial Highlights: • 9.8% growth in operating revenue for Q4 FY24 • Full-year revenue reached INR 608 crores, a 10% increase • Gross margins at 74% and EBITDA grew by 14% to INR 183.6 crores • Profit after tax for FY24 was INR 93.3 crores, an 11% increase year-on-year
Market Growth and Challenges • Growth Areas: • Significant growth in non-traditional wine markets (Telangana, Rajasthan) • CSD business grew over 50% • Wine tourism revenue increased by 22% in FY24 • Challenges: • Difficulties in key markets like Mumbai and Goa • Impact of Maharashtra VAT refund scheme cap on future refunds
Strategic Expansion and Sustainability • Expansion Plans: • Opening of Milestone Cellars near Nasik Airport • Expansion of ND Wines for enhanced wine tourism • Investments in facilities in Karnataka and New York • Sustainability Goals: • Increase renewable energy usage from 60% to 70% by FY25, aiming for 100% in five years
Future Outlook and Market Position • Market Strategy: • Focus on premium wine segments and wine tourism as a D2C business • Plans to explore M&A opportunities in the alcobev sector • Growth Projections: • Targeting strong double-digit growth in Elite and Premium segments • Anticipating mid-single-digit growth in the economy segment
Financial Concerns and Management Responses • Concerns Raised: • Rising trade receivables and inventory levels • Potential reductions in realizations in Premium and Elite segments • Management Responses: • Optimism about long-term wine consumption growth in India • Assurance that overall value growth remains higher than volume growth
Revenue Distribution and Market Dynamics • Revenue Insights: • Maharashtra accounts for 52% of domestic wine revenue • Higher margins in Maharashtra due to incentives, but growth in non-Maharashtra markets expected to outpace Maharashtra
Conclusion • The call concluded with a focus on maintaining growth and addressing market challenges while emphasizing the company's commitment to sustainability and strategic expansion.
Submission Details • Transcript submitted on February 16, 2024. • Discussed un-audited financial results for Q3 FY24 and nine months ending December 31, 2023. • Key management included CEO Rajeev Samant, COO Karan Vaswani, and CFO Abhishek Kapoor. • Moderated by Runjhun Jain from Ernst & Young. • Compliance with SEBI Listing Regulations emphasized.
Financial Performance Highlights • Record Revenues: INR 217 crores, a 4% YoY increase. • EBITDA Margin: All-time high of 33.7%. • PAT Margin: 19.8%. • Sales and Distribution Costs: Increased by 25%, affecting net revenue growth. • Goa Performance: Impacted by licensing issues but expected to rebound in Q4. • Premium Wine Segment: Represents 77% of sales value. • Wine Tourism: Grew by 16%, with record visitor numbers.
Key Financial Metrics • Revenue Growth: 4% with a 6.5% increase in excise. • Elite and Premium Portfolio Growth: 7.3%, contributing to 77% of total value. • Volume Growth: 4.6%. • Gross Margins: Expanded by 490 basis points to 67%. • Profit After Tax: INR 79.8 crores, up 14.3% YoY. • Interim Dividend: INR 4 per share declared. • Debt Position: Strong with a debt-to-EBITDA ratio of 1.3x.
Management Insights • Sales and Distribution Spending: Increased in Maharashtra due to competitive pressures. • Pricing Power: Varies by state; free pricing states allow for 4-5% annual increases. • Future Growth: India projected to be a top wine growth market in five years. • VAT Refund: Awaiting approximately INR 146 crores.
Market and Production Insights • Harvests: Consistent good harvests over the past four years; no significant financial benefits from quality improvements. • Capacity Utilization: Producing more wine than sold to mitigate climate risks. • Hospitality Sector Growth: Expected to continue. • Volume Discrepancy: Noted between wine categories; anticipated return to normal trends in Q4. • Imported Wines: Contribute around 4% to revenue; Sula's brands are more profitable.
Export and Market Trends • Exports: Account for 2-3% of production; domestic sales are more profitable. • Canned Wine Market: Emerging market with potential for growth. • Tier 2 Markets: Expected to drive future growth, particularly in Punjab and Uttar Pradesh. • Peak Revenue Period: Identified as Q3, with optimism for strong recovery in Q4.
Sula Vineyards Limited Conference Call Summary (November 10, 2023)
Submission Details • Transcript submitted to National Stock Exchange of India and BSE Limited on November 14, 2023. • Discussion of un-audited financial results for Q2 and half-year ending September 30, 2023. • Key management present: CEO Rajeev Samant, COO Karan Vasani, CFO Abhishek Kapoor.
Financial Performance Highlights • Revenue Growth: 11.6% year-over-year, reaching Rs 142.8 crores. • Premium Portfolio: 15% increase in Elite & Premium wines, constituting 74% of total sales. • Wine Tourism: Grew by 27%, with a 43% rise in tastings. • EBITDA Margin: Improved to 31.6%. • Profit After Tax (PAT): Increased to 16.2%. • Sustainability Commitment: Aiming for 70% solar energy by 2026.
Market Dynamics • Shift in revenue sources with reduced reliance on Maharashtra, dropping from 8.9% to 7.4%. • Optimism regarding a pending court ruling on excise blending. • Focus on premium wine category amidst low per capita wine consumption in India.
Leadership Changes • Karan Vasani appointed as COO. • Abhishek Kapoor appointed as CFO.
Key Financial Metrics for H1 • Revenue growth of 11.6% driven by premiumization. • Elite & Premium categories contributed 73.5% to the portfolio. • Wine tourism revenues increased by 27%. • Profit after tax reached Rs 36.8 crores.
Future Plans and Strategies • Increased annual capital expenditure to Rs 65 crores for capacity expansion and renewable investments. • Focus on enhancing wine tourism offerings and expanding sales in tier one and tier two cities. • Projected wine tourism revenues to exceed Rs 90 crores this year.
Q&A Highlights • Discussion on Maharashtra's VAT collection and its impact on revenue. • Insights on gross margins and market dynamics due to low excise duty. • Clarification on vineyard land ownership, with over 90% grapes sourced from third-party growers.
Conclusion • Management concluded the call with well wishes for Diwali.
Sula Vineyards Limited Q1 FY '24 Earnings Conference Call Summary
Key Executives • Founder and CEO: Rajeev Samant • COO: Chaitanya Rathi • Chief Winemaker: Karan Vasani
Financial Performance • Record Revenue: INR 118 crores, 22% year-over-year increase • EBITDA Margin: Stable at 27% • PAT Margin: Increased to 11.7% • Growth Drivers: • 30% growth in Own Brands • Over 35% growth in Elite and Premium wines • 12% growth in wine tourism revenue
Leadership Changes • New CFO: Abhishek Kapoor appointed, bringing extensive experience
Operational Insights • Monsoon Impact: Slightly below normal rainfall in Nasik, but good harvest expected • Excise Duty Compliance: Blending practices align with Maharashtra's wine policy • Sales Growth: Projected increase of 13% to 15% in retail sales
VAT Refund and Growth Sustainability • VAT Refund: Optimism about renewal due to political changes • Future Growth Rates: Expected stabilization between 6% to 10%
Margin and Sales Strategy • EBITDA Margins: Current quarter at 27%, focus on increasing wine sales • Regulatory Developments: Home delivery of wine approved, positive for the industry
Wine Tourism and Marketing Initiatives • New Accommodations: Expected to boost wine and non-wine revenues • Wine-By-The-Glass Program: Effective in increasing sales • Marketing Focus: Raising wine awareness in Tier 1 and Tier 2 cities
Capital Expenditure Plans • 2024 Capex: Estimated INR 55-60 crores, focusing on production capacity and sustainability • Wine Tourism Investment: Minimal, as recent additions funded by local partners
Market Dynamics • Import Duties: Minimal impact from reduced duties on Australian wines • Market Share: Gained in premium segment, ceded some share in lower-cost segment
Sales Performance • Volume Growth: 15%, with 74% of revenue from elite and premium wines • Maharashtra Growth: Slower growth affecting overall gross margins
Conclusion • Confidence in Future: Rajeev Samant expressed optimism about team performance and future results.
Sula Vineyards Limited Q4 FY23 Earnings Conference Call Summary
Submission Details • Date of submission: May 10, 2023 • Call date: May 4, 2023 • Audience: National Stock Exchange of India and BSE Limited • Content: Audited financial results for the year ending March 31, 2023 • Key management participants: Rajeev Samant (CEO), Chaitanya Rathi (COO), Bittu Varghese (CFO) • Availability: Investor relations website
Financial Highlights • Record-breaking year with: • 22% increase in revenue • Significant rise in EBITDA and PAT margins • Own Brands revenue growth of 26% (87% of total revenue) • 30% increase in wine tourism revenue (nearly 350,000 visitors) • 50% growth in EPS • Debt-to-EBITDA ratio of 1.2x
Strategic Focus • Emphasis on: • Premiumization of products • Expanding wine awareness in India • Enhancing sustainability efforts • Leveraging digital marketing for Tier 1 and Tier 2 markets
Marketing and Sales • Increased marketing spending for FY '24 • Stable general sales expenses • Successful winery extension and strong harvest ensuring quality • 5% price increase in key markets, well-received
Growth Expectations • Ongoing premiumization trend in product mix • Competition from foreign brands addressed • Aim to grow wine's market share (currently at 1%) • Optimism about doubling or tripling business in coming years
Capital Expenditure • FY '23 capex: INR 80 crores, primarily for new winery cellar • FY '24 planned capex: INR 55 crores, totaling INR 140 crores over two years
Market Insights • Technopak's projection: 15% volume growth in wine market • Focus on deepening existing product portfolio rather than expanding • Targeting new drinkers in urban areas to convert spirits consumers to wine
Craft Segment and Tourism • Growth potential in Indian craft wine segment noted • Wine tourism business expected to exceed INR 100 crores in FY’24 • Focus on the Indian market over exports
Pricing Strategy • 75% of revenue from free pricing in certain states • Positive price increase trends without significant taxation hikes • High demand for accommodations, plans for expansion managed by partners
Conclusion • Call concluded with thanks and invitation for further inquiries through the Investor Relations team.