The revised price target implies an upside of nearly 30% from Monday’s closing price.
Analysts said Maharashtra is the largest market for Sula and accounts for almost half its revenues.
“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,” said CLSA’s analysts Aditya Soman and Vatsal Dujari in a client note on Monday. “Sula is the clear market leader with more than 50% market share, and we believe it is best placed to benefit from a penetration catch-up for wines relative to other alcoholic beverages.”
Under this scheme, 80% of value-added tax (VAT) is reimbursed as a subsidy for five years.
“The continuation of WIPS would remove regulatory uncertainty, offering better earnings visibility, and it merits a re-rating,” said a report by Kotak Institutional Equities. “VAT refunds of ₹439 million accounted for 28% of Sula’s overall Ebitda in FY23.”
The stock has rallied 21% in the past ten trading sessions. Sula Vineyards launched its initial public offer in December 2022 at ₹357 per share.