Sula Vineyards Flops On Market Debut, Drops As Much As 5%

Sula Vineyards Ltd fell more than 5% on its trading debut in a dull market on Thursday, valuing the winemaker at 28.51 billion rupees ($344.56 million), after a weaker-than-expected response to its initial public offering last week.

The stock listed at 361 rupees on the National Stock Exchange, at a 1.1% premium to its offer price of 357 rupees before falling as much as 5.2% to 338.60 rupees.

It was last trading down 4.2% at 341.8 rupees in a broader market that was down 0.58%.

The listing comes as a hawkish central bank stance, global growth worries and COVID-19 fears in China take the sheen off the domestic equities market, which had outperformed global peers to hit a record high earlier this month.

The Nifty 50 is now down over 3% from peaks. The last few weeks of the year also typically register slower trading activity.

"The macro environment is currently not supporting the company's listing. But going ahead, the company's own fundamentals will work strongly," said Astha Jain of Hem Securities.

"We like Sula, given (its) market leadership in India's grape wine industry, especially in premium brands," said Motilal Oswal equity strategist Hemang Jani. "It enjoys high entry barriers and is well placed to capture the industry growth."

Last week, the winemaker's IPO got bids for more than twice the shares on offer, led by interest from institutional investors. Still, it was weaker than what analysts had pencilled in for its strong brand and growth outlook.

It raised a total of 9.6 billion rupees in the IPO, including 2.88 billion rupees from anchor investors like Abu Dhabi Investment Authority and Goldman Sachs.

Sula, India's largest winemaker, has a portfolio of 56 labels from 13 of its own brands and 20 international ones. Its net revenue rose 8% year-over-year to 4.57 billion rupees in fiscal year 2022.

($1 = 82.7430 Indian rupees)

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