Sula Vineyards Q2 FY26: Tourism Up, Profit Falls

Why Sula’s Q2 FY26 update matters

Sula Vineyards, India’s largest wine producer, reported a steady top line in Q2 FY26 but a sharp fall in profit and EBITDA as near-term disruptions affected its core business. The company flagged a temporary route-to-market issue in Telangana, its third-largest market, which weighed on Own Brands performance. At the same time, wine tourism delivered a record second quarter, supported by higher footfalls, better occupancy and higher spend per guest. The quarter also included a key governance update, with shareholders approving CEO Rajeev Samant’s re-appointment through a postal ballot concluded on December 11, 2025.

Q2 FY26 financial performance at a glance

Revenue from operations for the quarter came in at ₹139.66 crore, down 1.1% year-on-year from ₹141.21 crore. Gross profit was ₹90.30 crore, down 13.5% year-on-year, while operating EBITDA fell to ₹25.50 crore, down 24.3%. EBITDA margin dropped to 18.23% from 23.79%, a decline of 556 basis points. Net profit declined to ₹6.02 crore from ₹14.48 crore, a fall of 58.4%.

Telangana disruption and its impact on Own Brands

Management attributed subdued Own Brands performance largely to a short-term route-to-market disruption in Telangana. The company linked the disruption to the expiry of retail licences in November 2025, which led to destocking ahead of new issuances. Sula said it expects recovery as the licence auction process concludes and supplies transition to new holders beginning in December 2025. Excluding the Telangana impact, the company said revenue grew in the mid-single digits year-on-year in Q2.

Own Brands: premium mix stable, but revenue dips

Own Brands revenue declined 2.5% year-on-year to ₹124.10 crore from ₹127.30 crore. Despite the disruption, the share of Elite and Premium wines remained stable at 78% in Q2 FY26. The company also pointed to healthy double-digit growth in eight states, including Haryana, Uttar Pradesh and Rajasthan, supporting performance outside Telangana. Separately, sales to the Canteen Stores Department (CSD) nearly doubled year-on-year, which management linked to expanded label listings.

Wine tourism: record Q2 performance continues

Wine tourism revenue rose 7.7% year-on-year to ₹13.20 crore, described as the company’s highest-ever Q2 revenue for the segment. Resort occupancy improved to 77% from 74% a year earlier, indicating stronger demand for Sula’s hospitality offerings. Management attributed the growth to higher footfalls, record occupancy and increased spend per guest. The company also referenced record single-day revenues over the Independence Day weekend during the period.

Product and operating updates highlighted in the quarter

Sula said Elite and Premium wines maintained a high contribution, supporting its premiumisation strategy even as overall urban demand remained subdued. The company launched Muscat Blanc, described as its first low-alcohol premium wine, and noted a positive consumer response. On the hospitality side, it outlined expansion plans for Domaine Sula, including a new tasting room and restaurant expansion targeted by the end of Q3 FY26. It also flagged an infrastructure tailwind with the Samruddhi Highway opening, which it said reduced Mumbai to Nashik travel time by 45 minutes.

Management commentary: focus on H2 FY26 profitability

CEO Rajeev Samant said revenue from operations was steady in Q2 FY26 and highlighted the record quarter in wine tourism. He said Own Brands were subdued due to the Telangana route-to-market disruption and reiterated that excluding Telangana, revenue grew in the mid-single digits year-on-year. On the second half outlook, the company said it expects EBITDA margins to improve in H2 FY26, supported by higher Wine Industry Promotion Subsidy (WIPS) income, the phasing out of high-cost inventory from last year, and sustained traction in wine tourism.

Credit rating action: ICRA revises outlook to Negative

ICRA reaffirmed Sula Vineyards’ ratings but revised the outlook from Stable to Negative. Long-term ratings remained at [ICRA]A+ and short-term ratings at [ICRA]A1, while the outlook changed to Negative across several facilities. In a separate development, Sula’s wholly-owned subsidiary Artisan Spirits Private Limited received a rectification order resulting in the dropping of a tax demand of ₹21.34 crore (₹9.70 crore tax, ₹9.20 crore interest, and ₹2.44 crore penalty).

Upcoming results review: board meeting set for Feb 6, 2026

As per a company filing referenced by analysts, Sula Vineyards has scheduled a board meeting for February 6, 2026 to review and approve unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025, subject to limited review by the statutory auditor. Ahead of that event, analyst notes in the feed indicate price targets and fair value estimates being maintained or revised based on changes in assumptions around revenue growth, margins and the future P/E multiple.

Analyst targets, assumptions, and what changed

One analyst update kept a fair value estimate steady at ₹201.5 while adjusting assumptions around revenue growth, profit margins and future P/E. Another update kept a price target steady at ₹230.5, reflecting unchanged assumptions that included revenue growth of 11.16%, profit margin of 15.38%, and a future P/E of about 23.58x. A separate note indicated a trim in price target from ₹242.75 to ₹230.50 due to slightly lower revenue growth and profit margins, alongside a modestly higher future P/E multiple. Another item referenced a fair value target of ₹289.50 with unchanged consensus forecasts for revenue growth of 11.2% per annum and net profit margin of 13.91%.

Stock movement, volatility, and seasonality snapshot

The provided return snapshot showed Sula Vineyards at +0.22% over 1 day, +1.57% over 5 days, +19.46% over 1 month, -28.01% over 6 months, -38.42% over 1 year, and -46.09% over 5 years. Another return snapshot in the feed showed +0.30% over 1 day, +2.04% over 5 days, -8.93% over 1 month, -40.98% over 6 months, -43.58% over 1 year, and -52.94% over 5 years. A volatility table put SULA’s average weekly movement at 6.8%, versus 6.9% for the beverage industry and 7.1% for the market average. On seasonality, the data noted that Sula Vineyards delivered positive returns in May in 2 out of 4 years.

Key facts table

Timeline of key events in the feed

Conclusion

Sula Vineyards’ Q2 FY26 numbers showed flat revenue but weaker profitability, driven by disruption in Telangana and a lower EBITDA margin, while wine tourism continued to grow and delivered a record quarter. The company has indicated that margins may improve in H2 FY26 on higher WIPS income, inventory cost normalisation and sustained tourism traction. The next key checkpoint is the February 6, 2026 board meeting to review the unaudited results for the quarter and nine months ended December 31, 2025.