Sula Vineyards’ Rs 960.35 crore initial public offering (IPO) received a lukewarm response from investors on the second day of the bidding process. On the first day, the issue was subscribed to 28%.
The company has set a price for its shares at Rs 340-357 per share to be sold between December 12-14, and it is offering a lot size of 42 equity shares. The offering is an offer for sale (OFS) of over 2.69 crore equity shares.
Investors bid for 75,60,672 equity shares, or 40% of the 1,88,30,372 equity shares offered for subscription by 11.50 a.m. on Tuesday, December 13, according to BSE data.
Retail bidders received 70% of the quota, while non-institutional investors received 24% of the allocation. However, the portion for qualified institutional bidders was spot on.
Brokerage firms are split on the issue. Despite being a pure OFS play, some are bullish on the company’s growing fundamentals and high entry barriers, while others are skeptical of its aggressive valuations.
According to Ashika Research’s pre-IPO note, Sula has focused on ‘elite and premium’ products, with their revenue share increasing from 67.81% in FY20 to 70.57% in FY22, at the expense of ‘economy and popular categories.
“Together with the reduction in net debt to equity ratio from 1.23 in FY20 to 0.58 in FY22, ROCE improved from 4.09% in FY20 to 20.86% in FY22,” it added with a subscribe rating for the issue.
The company’s book-running managers are Kotak Mahindra Capital Company, CLSA India, and IIFL Securities NSE 0.67%, and the issue’s registrar is KFin Technologies.
According to Aum Capital, which has a subscribe rating on the issue, Sula Vineyards is the largest wine manufacturer in India, with the largest market share.
“A rise in disposable income is expected to increase the per capita wine consumption in the country; Goodwill amongst its suppliers and increasing brand value amongst the consumers would enable it to report a steady performance in the years to come,” it said.