The Rs 960.35-crore IPO by Sula Vineyards was subscribed 28 per cent on Day 1 of the bidding process. The issue received total bids of 52,34,670 shares against the issue size of 1,88,30,372 shares. The quota reserved for retail individual investors (RIIs) was subscribed 48 per cent and that of non institutional investors(NIIs) 18 per cent.
Ahead of the IPO, the largest wine producer and seller finalised allocation of 8,070,158 shares to anchor investors at Rs 357 a piece, aggregating Rs 288.10 crore. The IPO will conclude on December 14, the basis of allotment will likely be finalised by December 19 and the listing of Sula Vineyards shares are likely by December 22.
Last heard, the IPO was commanding a grey market premium (GMP) of Rs 19 apiece against Rs 34 earlier, suggesting prospects of modest listing gains. Analysts are largely positive on the issue.
Anand Rathi said Sula Vineyards IPO is asking for a P/E 35.8 times and market cap of Rs 3,005.80 crore post issue of equity shares and return on net worth of 11.45 per cent. It believes Sula Vineyards IPO is fairly priced and recommended a “Subscribe- Long Term” rating to the IPO.
“At the issue price of Rs 340-357, the stock is trading at 51.3 times/53.8 times its FY2022 earnings, which is at discount to the large peers. The discount to peers could be justified by risk related to high concentration of buyers and state government grants on VAT contribute to a large part of its profitability. Consequently, the scope for handsome listing gains is limited as of now. However, investors could look at the stock in case of weakness post its listing,” Sharekhan said
Sula Vineyards is the market leader across all four price segments namely elite, premium, economy and popular.
It is also the market leader across wine variants namely red, white and sparkling wines.
Sula’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.
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