Sula Vineyards Q2 Profit Rises 34% Despite Cost Pressure

SULA reported a resilient Q2 FY27 performance, with consolidated net profit increasing 34% year-on-year to ₹8.1 crore compared with ₹6.02 crore in the corresponding quarter last year. Net revenue from operations stood at ₹135.5 crore, registering a growth of approximately 3.5%. The company’s Elite & Premium portfolio continued to drive growth, with revenue rising 9% to ₹105.4 crore. This portfolio now accounts for 82% of own-brand revenue, up from 78% a year ago, reflecting a gradual shift towards higher-value wines. Meanwhile, the Economy & Popular segment declined 16.4% to ₹23 crore, indicating a mixed performance across the portfolio. Wine tourism remained another key growth driver. Revenue from this segment increased 24% to ₹16.3 crore, supported by higher room revenue, which grew 32%. The hospitality and tourism business is increasingly contributing to Sula’s overall revenue diversification. However, profitability continues to face cost pressures. Gross margin declined by 278 basis points to 66.2%, as cost of goods sold increased 13% to ₹45.8 crore. Despite this, EBITDA rose 8.1% to ₹27.5 crore, indicating some operating cost optimisation. For investors, key monitorables include premium portfolio growth, grape procurement costs, gross margin recovery, wine tourism expansion and the performance of the economy segment. The company’s planned hotel expansion also offers a growth avenue, but execution and capital efficiency will remain important. Learning Takeaway: A company can report profit growth even when margins face pressure. Investors should examine product mix, segment-wise performance, cost trends and the sustainability of earnings rather than focusing only on the headline PAT growth. Disclosure: This post is for educational purposes only and does not constitute investment advice. Any holdings or conflicts of interest should be disclosed separately.