Sula Vineyards Sees Revenue Growth But Profit Falls In Q4 FY26

Sula Vineyards reported a 34% year-on-year drop in Profit After Tax (PAT) for the fourth quarter of FY26, despite a 7% increase in revenue to ₹142 crore. The revenue growth was driven by strong performance in its Own Brands segment and record results from its Wine Tourism business.

Q4 FY26 Performance

Revenue for Q4 FY26 reached ₹142 crore, up 7% from the previous year. This increase was supported by the Own Brands segment and particularly by a record year for Wine Tourism. The Wine Tourism segment generated ₹110 crore in revenue for the full fiscal year FY26, surpassing the ₹100 crore mark for the first time, boosted by higher visitor numbers and room revenues. However, profitability was significantly impacted, with PAT falling 34% year-on-year.

Company Background

India's largest wine producer, Sula Vineyards has consistently developed its wine tourism offerings. This segment has grown from a niche attraction into a substantial revenue contributor, reflecting increasing consumer interest in wine-related experiences. The company has also emphasized sustainability, increasing its use of renewable energy sources to 75% in FY26.

Strategic Focus and Profit Pressures

This quarter highlights Sula's two-pronged strategy: expanding its high-margin Wine Tourism sector and growing its core Own Brands. The record tourism revenue underscores the segment's potential. Conversely, the impact of rising grape costs on profitability signals a near-to-medium term challenge. The company intends to allocate more capital expenditure to Wine Tourism and pursue strategic acquisitions, such as the Chandon estate, to diversify revenue and enhance customer experience.

Future Plans and Investments

Shareholders can anticipate increased capital expenditure focused on expanding resort capacity and improving wine tourism infrastructure. The proposed acquisition of the Chandon estate is expected to strengthen the company's premium wine tourism portfolio. Sula also aims to list new wines in CSD (Consumer Sales Department) channels by Q4 FY27, broadening its market reach. A strategy is also in place to increase the proportion of premium and elite wines within the 'Own Brands' portfolio.

Key Risks and Challenges

Higher blended grape costs, a result of the strategic shift towards premium wine grapes, are expected to pressure profitability over the next few quarters. Margin moderation is anticipated, with uncertainty about a swift return to 30% margins given these cost pressures. Additional challenges for FY27 include industry-wide discounting and increased packing material costs, potentially linked to geopolitical events in West Asia. Ensuring adequate retail infrastructure, such as cooling facilities, especially in state-run outlets, remains a persistent hurdle for wine sales.

Competitive Landscape

While direct listed peers in India's wine industry are limited, Sula competes across the broader alcoholic beverages sector. Companies like United Spirits and Radico Khaitan primarily focus on spirits and often report growth from premiumization, facing similar regulatory and cost challenges. Sula distinguishes itself through its integrated model, which combines wine production with a rapidly expanding wine tourism business, offering a unique value proposition not matched by its larger, spirits-focused competitors.

Key Figures at a Glance

• Full-year FY26 revenue: ₹596 crore (2% year-on-year decline, excluding one-time gain).
• Own Brands Q4 FY26 growth: 5% year-on-year.
• Wine Tourism revenue FY26: ₹110 crore (record high).
• CSD sales FY26 growth: 21% year-on-year.
• Renewable energy usage FY26: 75%.

What Investors Are Watching

Investors will monitor the completion of the Chandon estate acquisition, targeted for the first half of FY27. The rollout of new wines in CSD outlets by Q4 FY27 is also a key point. Updates on Q1 FY27 project implementations, including a new retail store at Domaine Dindori Winery, will be watched. The company is expected to detail FY27 resort expansion plans during its next earnings call.