Stock Of The Day: Sula Vineyards Halves From Peak Amid Muted Q3 Demand

Sula Vineyards Ltd. shares are in a bearish grip, on the way to their listing price, after 110% gains for over a year since their debut on Indian exchanges. The stock is struggling amid subdued demand and pressured margins due to bevy of factors.

The winemaker's stock had tumbled 51% from its life high of Rs 699 apiece on Jan. 9 last year. The counter has fallen nearly 18% in 2025, after declining in 15 out of the 20 sessions this year.

The stock is trading below its long-term trend gauge — 200-day daily moving average — and below the 14-day simple moving average and the 21-day exponential moving average.

Sula Vineyards' scrip is currently testing the immediate support near the 340-level, which is also two standard deviations below the 14-day moving average. A strong close below this level could send the stock towards the Rs 325 level. On the upside, the stock needs to close above the 14-DMA of Rs 370 to see any reversal in the short term.

The stock fell as much as 2.54% to Rs 340.2 in early trade on Tuesday, compared to a 0.17% advance in the NSE Nifty 50. The relative strength index was at 19, implying the stock is oversold.

Four of the seven analysts tracking the company have a 'buy' rating, two suggest a 'hold', and one has a 'sell' according to Bloomberg data. The average of the 12-month analysts' price target implies a potential upside of 36%.

The winemaker will release its third-quarter earnings on Feb. 5. As per its quarterly business update, net revenue for the period fell 0.7% to Rs 217 crore against Rs 219 crore in the same period last year due to muted growth in its own brands at 1% in annual terms to Rs 195 crore.

According to Dolat Research's Himanshu Shah, Sula saw its core markets of Maharashtra and Karnataka struggle due to change in consumer preferences, higher discounting, on-trade disruption in Pune, state elections during December quarter, among other reasons.

The company also saw margin pressure on the back of upfront cists from significant incremental growth in new cities and states, the analyst said.

In the September quarter, Sula Vineyards had reported its highest ever 'own brands' revenue, driven by the 'Elite & Premium' portfolio. However, the company had generated muted revenue in the quarter ended September 2024 due to a broader slowdown in discretionary spending at the macroeconomic level. Net revenue rose marginally to Rs 141.8 crore in the July-September quarter from Rs 143.7 crore over the same period a year ago.