Sula Jumps 17% To Record High As CLSA Upgrades Stock To 'Buy'

Shares of Sula Vineyards Ltd. surged over 17% to hit an all-time high on Monday after CLSA upgraded the stock to a 'buy' after Maharashtra reinstated subsidy.

The research firm raised the target price by 51% from Rs 571 apiece to Rs 863, implying a return potential of 56%, according to a CLSA note.

The brokerage also raised its estimates by up to 4% for financial year 2024–26 as the Maharashtra government reinstated the 80% subsidy for five years on wines produced and sold in the state. This will benefit Sula as Maharashtra is its largest market and accounts for almost half its revenue.

"In our view, this removes a major distraction for investors, who can now focus on the long-term opportunity for wine consumption and wine tourism in India," CLSA said.

It expects wine consumption to rise at a compounded annual growth rate of 15% over the next decade due to the rising middle class, growing restaurants and increasing incomes. It has forecasted a 20% CAGR for Sula in fiscal 2023–33.

CLSA said Sula was planning to expand its tourism at its wineries beyond Maharashtra.