India’s leading wine producer faces pressure after a ratings outlook downgrade and weaker quarterly earnings, even as wine tourism continues to grow.
Nashik, November 20, 2025 – Shares of Sula Vineyards fell over one percent to Rs 242 on Thursday after ratings agency ICRA revised its outlook on the company’s long-term ratings from stable to negative. The agency reaffirmed the company’s existing ratings across all major instruments but flagged concerns about near-term performance.
ICRA maintained Sula’s [ICRA]A+ rating on its long-term fund-based term loan, while shifting the outlook to negative. The same change was applied to the company’s long-term and short-term fund-based and non-fund-based facilities. Ratings on the company’s unallocated limits were also reaffirmed with a revised negative outlook.
The downgrade follows a mixed performance in the quarter ending September 30. Sula’s net profit dropped sharply to Rs 6 crore, down over 58 percent from Rs 14.5 crore a year earlier. Revenue from operations slipped slightly to Rs 139 crore from Rs 141 crore in the same quarter last year. Sales from its own brands declined more than 2 percent to Rs 124 crore year-on-year.
The company’s EBITDA margin fell to 18.2 percent, a decline of 557 basis points from over 23 percent last year. According to Sula, the revenue dip was driven by a route-to-market disruption in Telangana, its third-largest market. The expiry of retail licenses in November 2025 led to destocking by retailers ahead of the new license cycle expected in December. Sula indicated that with the auction process nearing completion, sales should recover in the second half of the year.
Management noted that tight cost control helped soften the impact of the weaker gross margin. Operating expenses fell 8 percent year-on-year, partially offsetting the margin pressure. The company expects EBITDA margins to improve in the second half of FY26, supported by higher WIPS income, the clearance of high-cost inventory, and continued strength in wine tourism.
Wine tourism remains a bright spot for Sula. Increasing footfall, higher resort occupancy, and greater guest spending continue to boost this segment. Occupancy at Sula’s resorts rose to 77 percent in Q2 FY26, up from 74 percent a year earlier, highlighting the growing appeal of vineyard travel experiences that combine leisure, luxury, and local culture.
With market conditions expected to stabilise and tourism growth on the rise, Sula remains optimistic about a recovery in the coming months.
