India's largest winemaker Sula Vineyards drops 5% in market debut (updated)

Sula Vineyards

22/12/2022 05:11

(Adds analysts' comments, updates shares)
    By Nandan Mandayam
       BENGALURU, Dec 22 (Reuters) - Sula Vineyards Ltd
 SULA.NS  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  .NSEI  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  .NSEI  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)
 (Reporting by Nandan Mandayam in Bengaluru; Editing by Dhanya
Ann Thoppil and Janane Venkatraman)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))