Winemaker Sula to test IPO market after tech unicorns flop

NEW DELHI: Whereas recession fears have seen new listings grind to a halt this yr, one of many few corporations presently searching for to go public in Mumbai is testing investor urge for food for India’s rising wine market.
Sula Vineyards Ltd., which final month filed for an preliminary public providing, says it has over a 50% share of India’s small however quickly rising wine market. The 26-year-old firm has opened tasting rooms and hosted an annual music pageant as a part of its effort to make the drink trendy in a younger nation with an increasing center class.
“When Sula entered the market, wine was seen as one thing aspirational — for individuals above 45 years of age,” stated Abhay Kewadkar, an impartial alcoholic beverage marketing consultant. “They cleverly modified that perspective by focusing on youthful customers.”
The winemaker is trying to go public at a time when IPOs have dried up in India, as in a lot of the world, amid considerations of a recession. Younger retail merchants who helped drive the native inventory market over the previous couple years have been burned in latest months by plunges in high-flying tech unicorns comparable to Zomato Ltd. and Paytm guardian One 97 Communications Ltd.
The S&P BSE IPO Index, a gauge monitoring the efficiency of Indian shares for the primary two years after itemizing, has fallen 24% to date in 2022 after almost tripling within the earlier three years.
Sula hasn’t but disclosed a price for the deliberate of sale of a few third of its present fairness, together with shares held by founder and Managing Director Rajeev Samant. The corporate posted gross sales of $57 million for the yr ended March 31, round a tenth of the income at Zomato and Paytm, although not like the 2 tech corporations Sula is worthwhile.
In its draft prospectus, Sula claims that India is the world’s third-largest marketplace for alcoholic drinks, at $33 billion in 2020, however wine solely accounts for 1%. The corporate believes this permits a lot room for progress, projecting whole Indian gross sales of three.4 million instances of wine in 2025, up 70% from the extent in 2021.
Samant, a 55-year-old Stanford graduate, has labored to spice up demand by selling wine tourism in Sula’s manufacturing base of Nashik, which is seen as India’s model of Napa Valley. The corporate says social media has additionally helped carry the beverage’s profile, and claims Sula is among the many high 10 most-followed vineyards on Instagram globally.
Sula will elevate no cash from the IPO itself, however hopes the itemizing will increase its visibility and model picture. It might even have a halo impact for the entire trade, with the corporate’s native opponents together with unlisted Fratelli Wines and Grover Zampa Vineyards.
“This IPO will carry the wine section into the limelight,” stated Ronak Soni, analyst at Equirus Securities Pvt. “It’s a fast-growing section.”