Sula Vineyards Share Price Falls After Q3 Profit Decline, Margin Hit

Sula Vineyards Ltd. stock fell nearly 5% in early trade on Thursday, after a decline in profit and revenue in the December quarter.

Consolidated net profit plunged 35% to Rs 28.1 crore in the third quarter, as compared to Rs 43 crore in the year-ago period. Analysts tracked by Bloomberg had a consensus estimate of Rs 40 crore.

Revenue fell 0.4% to Rs 200.2 crore, meeting an estimate of Rs 206 crore.

On the operating side, Ebitda fell 26.2% at Rs 53.1 crore, much lower than the estimate of Rs 68 crore. Likewise, the margin took a hit of nearly 10 percentage points, falling from 35.4% to 26.5% and against an estimate of 33%. This was caused by the purchase of stock in trade rising 50% and marketing expense growing by 15%.

Income from own brands grew 1% and wine tourism by 11.6%.

Shares of Sula Vineyards fell as much as 4.83% to Rs 347.5 apiece, soon after market opened. It was trading 4% lower at Rs 350.6 by 9:40 a.m., compared to a 0.17% decline in the benchmark Nifty 50.

The relative strength index was 45, while the total traded volume stood at 11 times its 30-day average.

The stock has declined 46% in the last 12 months.

Of the seven analysts tracking Sula Vineyards, four maintain a 'buy' rating on the stock, two recommend 'hold' and one suggests 'sell', according to Bloomberg data. The average of 12-month analysts' price target of Rs 472.5 implies a potential upside of 34%.