Sula Vineyards Q2 profit plunges 37% amid tepid urban demand, rising costs

India's leading winemaker, Sula Vineyards, reported a sharp 37% drop in net profit for the second quarter on Tuesday, November 12, 2024, citing a broader trend of sluggish urban consumer spending and weaker demand.

Sula's consolidated net profit fell to ₹14.5 crore in the quarter ending September 30, down from ₹23 crore in the same period last year.

In a regulatory filing, CEO Rajeev Samant stated, "Q2 was a muted quarter due to a slowdown in discretionary consumer spending, particularly in urban markets, where 90% of our sales are concentrated."

The company’s total revenue edged down by 1% to ₹132.4 crore from ₹133.7 crore a year earlier, while total expenses rose approximately 10%.

Sula's EBITDA margin also declined, slipping to 25.2% from 33% in the previous year.

The company attributed additional challenges to technical issues with New Delhi's Excise portal—used for placing orders and updating liquor stock—which impacted sales towards the quarter’s end.

Sula's core brands segment, which contributes about 90% of its total revenue, recorded a slight 0.3% increase in revenue for the quarter, while its smaller wine tourism division saw a modest 0.8% revenue growth.