Sula‍‌‍‍‌‍‌‍‍‌ Vineyards Shares Price Fall Over 2% After Q2FY26 Profit Slumps 58%

November 11, 2025: In early trade today, the share price of Sula Vineyards Ltd (NSE: SULA) dropped over 2% after the announcement of the company’s weak Q2FY26 results. The consolidated net profit slipped a sharp 58%, with the company experiencing higher costs and muted sales that hit margins.

Q2FY26 Earnings Show Profit Pressure

For Q2FY26, Sula Vineyards reported a consolidated revenue from operations of ₹139.7 crore against ₹141.2 crore in the corresponding period of the previous year, thereby marking a marginal decline of 1.1%. Gross profit was down 13.5% at ₹90.3 crore. Operating EBITDA was 24.3% lower at ₹25.5 crore. Net profit declined sharply by 58.4% to ₹6.02 crore, while PAT margin also slipped from 10.2% to 4.3%.

Various factors contributed to the decline, including a brief disruption in the retail licensing system in Telangana, expensive inventory carried forward, and a change in the sourcing model for the company’s tourism business. The combined effect of these factors, along with a change in the product mix, resulted in the company’s gross margins dropping by nearly 10 percentage points to 64.6% – a drop of 927 bps.

Segment-wise Performance

The “Own Brands” segment of Sula earned revenue of ₹124.1 crore, down 2.5% YoY, because of distribution challenges in Telangana. Without those, the segment would reflect mid-single-digit growth. On the other hand, “Wine Tourism” saw an impressive growth where revenues went up 7.7% YoY to ₹13.2 crore. The number of visitors crossed 77,800, with the occupancy rate reaching 77% new record quarter for this vertical. The other income increased 35.3% to 2.3 crore.

Management Commentary and Outlook

Executives noted that the drop in profit was temporary, primarily driven by the retail transition in Telangana and rising input costs. Performance is expected to rebound in the latter half of FY26, as new retail licences become operational in December and festive-season demand kicks in.

EBITDA margins are anticipated to return to previous levels once older stock is cleared and costs normalise. Meanwhile, the growth of the company’s tourism vertical and premium wine portfolio remains promising and is expected to serve as a key driver of stable long-term growth.

Strategic Developments and Expansion Plans

Very recently, Sula Vineyards inaugurated “The Haven by Sula,” a new resort in Nashik with 30 operational keys, and another 20 will be opened by March 2026 under Phase 2. Additionally, the company is working on the Domaine Sula property in Karnataka, where the new tasting room and restaurant will be ready by Q3FY26.

Further, Sula plans to expand its winery capacity by 1 million litres by the end of FY26, bringing the total to 19.2 million litres. The company also aims to launch three new wines during FY26 and strengthen its presence in canteen stores and domestic retail markets.

Stock Market Reaction and Valuation Snapshot

As of 11:50 am IST, Sula Vineyards was trading at ₹246.75, down 2.03% for the day. On Thursday, the stock moved in a range of ₹242.00–₹247.90, with a VWAP of ₹244.05. The volume of shares traded stood at 2.72 lakh, while the company’s market capitalization was ₹2,068 crore when the stock hit its 52-week low of ₹242.00.

REF: https://nsearchives.nseindia.com/corporate/SULA_10112025210709_SE_investor_presentation.pdf

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations