Sula Vineyards Falls 5.31%: Mixed Results and Technical Headwinds Shape the Week

Monday, 9 February: Mixed Quarterly Results and Rating Upgrade

Sula Vineyards began the week on a relatively positive note, with its stock price rising 1.96% to close at Rs.192.05, outperforming the Sensex gain of 1.04% that day. This movement coincided with the release of the company’s quarterly results for the period ended December 2025, which presented a mixed picture. Net sales surged 27.4% to ₹180.39 crores compared to the previous four-quarter average, signalling robust top-line growth amid a challenging sector environment.

However, profitability metrics painted a less favourable scenario. Profit after tax (PAT) declined 15.7% to ₹10.33 crores, while profit before tax excluding other income (PBT less OI) fell 7.7%. The return on capital employed (ROCE) was subdued at 9.59% for the half-year, reflecting inefficiencies in capital utilisation. Operational challenges were evident as the debtors turnover ratio dropped to 2.49 times, the lowest in recent history, and the debt-to-equity ratio rose to 0.71 times, indicating increased leverage.

On the same day, MarketsMOJO upgraded Sula Vineyards’ investment rating from Strong Sell to Sell, citing modest improvements in financial trends and technical indicators. The company’s Mojo Score improved to 31.0, reflecting cautious optimism despite persistent headwinds. The upgrade acknowledged the sales growth and stabilising financial trend score but highlighted ongoing margin pressures and elevated leverage as concerns.

Tuesday, 10 February: Profit Taking Amid Modest Sensex Gains

The stock price retreated 1.35% to Rs.189.45 on Tuesday, underperforming the Sensex’s modest 0.25% gain. This decline followed the initial enthusiasm on Monday and reflected investor caution given the mixed financial results and ongoing margin pressures. Trading volumes also dropped sharply to 20,684 shares, indicating reduced market participation. The broader market’s positive tone contrasted with Sula Vineyards’ weakening momentum.

Wednesday, 11 February: Continued Decline on Weak Profitability Signals

Sula Vineyards’ share price fell further by 2.82% to Rs.184.10, while the Sensex inched up 0.13%. The stock’s underperformance was consistent with the company’s deteriorating profitability metrics and operational challenges highlighted in the quarterly report. Volume remained subdued at 16,076 shares, suggesting limited buying interest amid persistent concerns over margin contraction and leverage.

Thursday, 12 February: Market Correction Hits Sula Vineyards

The stock declined 1.44% to Rs.181.45, underperforming the Sensex which fell 0.56%. This day’s price action reflected a broader market correction, with Sula Vineyards’ technical indicators remaining bearish. The company’s stock traded near its 52-week low of Rs.175.70, underscoring the ongoing pressure from weak earnings and operational inefficiencies. Trading volume dipped further to 12,931 shares.

Friday, 13 February: Week Closes with Further Losses

On the final trading day of the week, Sula Vineyards’ share price declined 1.71% to Rs.178.35, marking a 5.31% loss for the week. This was a sharper fall compared to the Sensex’s 1.40% decline, signalling continued investor caution. Volume picked up slightly to 21,842 shares, possibly reflecting some bargain hunting near the stock’s recent lows. The week’s price action confirmed the bearish technical outlook despite the earlier rating upgrade.

Key Takeaways from the Week

Positive Signals: Sula Vineyards demonstrated strong revenue growth with a 27.4% increase in net sales for the December quarter, indicating resilience in top-line performance despite sector challenges. The upgrade in investment rating from Strong Sell to Sell by MarketsMOJO reflects modest improvements in financial trends and technical indicators, suggesting some stabilisation in the company’s outlook.

Cautionary Signals: Profitability remains under pressure, with PAT declining 15.7% and PBT less other income falling 7.7%. Operational efficiency concerns persist, highlighted by the lowest-ever debtors turnover ratio of 2.49 times and a rising debt-to-equity ratio of 0.71 times. The stock’s 5.31% weekly decline and underperformance relative to the Sensex underscore ongoing investor caution amid bearish technical momentum.

Valuation and Market Context: Despite weak profitability, Sula Vineyards’ valuation metrics, including a ROCE of 9.59% and an enterprise value to capital employed ratio of 2.1, remain attractive relative to peers. However, the company’s long-term underperformance and declining institutional participation signal structural challenges that require close monitoring.

Conclusion

The week’s developments for Sula Vineyards Ltd encapsulate a complex narrative of mixed financial results, cautious rating upgrades, and persistent market scepticism. While the company’s robust sales growth and improved financial trend score offer some grounds for optimism, the continued contraction in profitability, elevated leverage, and bearish technical indicators weigh heavily on the stock’s near-term prospects.

Investors should remain attentive to forthcoming quarterly updates and any strategic initiatives aimed at enhancing operational efficiency and reducing financial risk. The current Sell rating reflects a tempered outlook, acknowledging incremental progress while recognising significant challenges ahead. Sula Vineyards’ performance this week serves as a reminder of the delicate balance between growth opportunities and financial discipline in the beverages sector.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →