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Sula Vineyards Sees 15% Gains When CLSA Increases Price Target and Projects Up to 55% Gains in a Year

<p>Sula Vineyards’ stock surged by about 15% to a peak of Rs 637.70 on January 8 on the counter release of CLSA’s “buy” rating. The international brokerage company has increased the winery’s target price from Rs 571 per share to Rs 863 per share, meaning that it has increased by 42% from the present price.</p>
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<p>Over the last month, Sula Vineyards’ stock has increased by more than 17%, whereas the BSE Sensex has only increased by 3%. Prior to this, on January 5, 2024, Sula Vineyards shares reached a 52-week high of Rs 567 per share.</p>
<p>The Maharashtra government recently announced the five-year renewal of the Wine Industry Promotion Scheme, which coincided with the upgrading of CLSA. Wineries are subject to a 20 percent Value Added Tax under this arrangement, of which 16 percent is rebated. Additionally, the state cabinet authorized a four-year repayment of the rebate under this program beginning with the fiscal year 2021.</p>
<p>According to CLSA, Maharashtra is the biggest market for Sula, a company located in Nashik, making up almost half of its income and roughly 45% to 50% of its volumes. The note said, “We believe that this eliminates a significant distraction for investors, allowing them to concentrate on the long-term opportunity for wine consumption and wine tourism in India.”</p>
<p>The brokerage also noted that over the next ten years, wine consumption is expected to grow at a Compounded Annual Growth Rate (CAGR) of 15% due to the growing middle class, the rapid expansion of restaurants, and rising incomes. Sula stands to benefit the most from this growth, as its market share exceeds 50%, positioning it as the industry leader.</p>
<p>According to CLSA, Sula is also at the forefront of wine tourism, which boosts the country’s wine industry and generates income in a nation where it is illegal to advertise alcoholic drinks. The firm intends to increase the number of people who visit its vineyards outside of Maharashtra.</p>
<p>CLSA has increased its Sula financial year 2024–2026 predictions by 0% and 4%, respectively.</p>
<p>Maharashtra generates an annual revenue of Rs 400 crore from the sale of wines, according to All India Wine Producers Association President Jagdish Holkar. Additionally, he said that 80% of the Rs 70–80 crore in yearly VAT payments are reimbursed.</p>
<p>Sula is recommended as a “buy” stock by all five of the analysts that follow the company. Out of the five, CLSA has the highest price target.</p>
<p>Sula Vineyards’ stock closed at Rs 556 on Friday, up 11.5%. Since its IPO, the stock has increased by 55% from Rs 357.</p>