Sula Vineyards Q3 FY26: Transcript Released, Management Discusses Challenges and Future Outlook
Sula Vineyards released its Q3 FY26 earnings call transcript. A tactical destocking in Karnataka impacted Q3 revenue. Wine tourism saw 34% YoY growth driven by a new resort and increased footfalls. The company is preparing for the India-EU FTA, believing its portfolio is largely protected. Management expects Own Brands to return to growth and margins to improve.
The announcement provides a detailed transcript of the earnings call, offering insights into the company's performance, strategic decisions like destocking, and future outlook. The discussion on the India-EU FTA and its potential impact, along with the wine tourism growth, are material factors for investors, warranting a medium impact assessment.
The company reported a challenging quarter due to strategic destocking, leading to a decline in EBITDA. However, positive aspects include strong growth in wine tourism, recovery in key markets, and preparedness for the India-EU FTA. The outlook suggests a return to growth and margin improvement, balancing the negative and positive factors.
Sula Vineyards Limited has released the transcript of its Q3 and 9M FY26 Earnings Conference Call, which was held on February 9, 2026. The call, featuring Founder and CEO Rajeev Samant and CFO Abhishek Kapoor, detailed the company's performance and strategic outlook.
Rajeev Samant acknowledged that Q3 FY26 was a challenging quarter, impacted by a tactical decision to destock in Karnataka, the company's second-largest market. This move aimed to right-size channel inventory and strengthen working capital. Excluding this impact, revenue was largely in line with the previous year. Demand recovery was noted in Maharashtra, the largest market, and Telangana, the third-largest, following license renewals. Other markets like UP, Rajasthan, and Goa, as well as the CSD channel, showed healthy double-digit growth. The premium and elite wine segments maintained an 80% share, with 'The Source' range showing strong double-digit growth and expanding its contribution to the business. A new white wine, 'The Source Chardonnay,' was launched.
Wine Tourism delivered robust year-on-year growth of 34% in Q3, driven by a 15% increase in footfalls and the opening of its third resort, 'The Haven by Sula.' This segment's performance helped offset weakness in Own Brands. The Haven added 50 keys, increasing total room capacity by 50% to 154 keys, with Q3 occupancy remaining stable at around 80% across all resorts. Record single-day revenue and footfalls were achieved during the Christmas 2025 and Republic Day 2026 weekends. The company plans significant capex allocation to Wine Tourism over the next two years.
Regarding the India-EU FTA, Samant explained that duty reductions apply only to wines priced above EUR 2.50 per 750 ml bottle CIF. He anticipates a phased duty reduction over 7-10 years and believes the framework is balanced, protecting over 95% of the company's portfolio. Sula is preparing for this by ramping up listings for its 'Rasa' and 'The Source' ranges.
Abhishek Kapoor provided financial details, noting that Q3 revenues were impacted by the INR 21 crore destocking in Karnataka. For the first 9 months of FY26, revenue stood at INR 454 crore, a 5% year-on-year decline (excluding a one-time WIPS unwinding benefit). Own Brands revenue declined by 7%, though 'The Source' grew 23% and CSD channel revenues increased by nearly 40%.
Profitability was affected by an adverse state mix due to lower contribution from Karnataka. EBITDA for Q3 declined 40% year-on-year to INR 32 crore. Capex is expected to moderate in FY26 and FY27. Net debt declined sequentially to INR 319 crore. The company expects Own Brands to return to growth in the coming quarters and Wine Tourism to sustain its momentum, with margins expected to improve.
In the Q&A, management discussed opportunities in the spirits segment, the potential impact of the FTA on imported wine competition, and the domestic pricing competition. They also addressed the impact of the grape harvest, noting a reduced crop for table grapes but sufficient supply for Sula's premium wines.
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Sula Vineyards Limited filed this with the NSE as a statutory disclosure, categorised under concall transcript released. It is a primary document, not a recommendation, and the desk marks it medium impact: worth reading, rarely worth acting on by itself.
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