Sula Vineyards may see muted market debut today, suggests grey market premium

Sula Vineyards, India's largest wine producer, is likely to make a muted debut on Thursday, suggests trends in the grey market. The IPO, which ran from December 12 to December 14,  last quoted at a grey market discount of Rs 12 per share, suggesting a weak  listing. The issue was seeing a weak trend in the grey market since December 14, thanks to volatility in the secondary markets and lower than expected listings of Dharmaj Crop Guard and Uniparts India.

The scope for handsome listing gains is limited, Sharekhan had said in its IPO note. The brokerage had advised investors to look at the stock in case of weakness post its listing.

Sula Vineyards is the market leader across all four price segments (Elite, premium, economy and popular) and also the market leader across all the wine variants namely red, white and sparkling wines. Sula's company’s business is broadly classified under two categories wine production, the import of wines and spirits, and the distribution of wines and spirits and sale of services from ownership and operation of wine tourism venues, including vineyard resorts and tasting rooms.

The Rs 960 crore IPO was subscribed 2.33 times in the three day bidding process, mainly led by qualified institutional buyers (QIBs).

The quota reserved for QIBs was subscribed 4.13 times; the one reserved for non-institutional buyers received 1.51 times bids while the retail quota was subscribed 1.65 times. The issue was subscribed only on the Day 3 of the bidding process.

At present, Sula produces 56 different labels of wine at four owned and two leased production facilities located in Maharashtra and Karnataka. The company has entered into long-term supply arrangements (of up to 12 years) with grape growers for 2,290 acres as of September 30. The company also distributes wines under a bouquet of popular brands including 'RASA,' 'Dindori', 'The Source,' 'Satori', 'Madera' & 'Dia' with its flagship brand 'Sula' being the category creator of wine in India.

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