Fratelli Vineyards Limited (BSE: 541741) Q1 2026 Earnings Call dated Aug. 13, 2025
Corporate Participants:
Unidentified Speaker
Gaurav Sekhri — Chairman & Managing Director
Aditya Sekhri — Director
Rajesh Garg — Chief Financial Officer
Analysts:
Unidentified Participant
Priya Sen — Analyst
Aryan Oswal — Analyst
Karan Kamdar — Analyst
Chetan Sharma — Analyst
Manan Gandhi — Analyst
Deepesh Sancheti — Analyst
Amit Mehendale — Analyst
Kshitij Verma — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The Fratelli Vineyards Limited Q1FY26 earnings conference call hosted by Goindia Advisors. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for the you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Priya Sen from Go India Advisors. Thank you. And over to you.
Priya Sen — Analyst
Thank you, Vishakha. Good afternoon everybody and welcome to Fratelli Vineyards Limited earnings conference call to discuss the Q1FY26 results have on the call Mr. Gaurav Sekri, Chairman and Managing Director. Mr. Aditya Sekri, Director. Mr. Rajesh Garg, Chief Financial Officer and Mr. Hemant Arora, Chief Business Officer. We must remind you that the discussion on today’s call may include certain forward looking statement and must therefore be viewed in conjunction with the risks that the company faces. May I now request Mr. Gaurav Sekri to take us through the company’s business outlook and the performance subsequent to which we will open the floor for Q and A.
Thank you. And over to you sir.
Gaurav Sekhri — Chairman & Managing Director
Good afternoon, Priya. Am I audible?
Priya Sen — Analyst
Yes sir, you are audible.
Gaurav Sekhri — Chairman & Managing Director
Okay, thank you. Good afternoon everyone. Thank you for joining us for the Q1FY26 earnings conference call of Fratelli Vineyards Limited. The financial results and investor presentation have been uploaded to the stock exchanges and I hope you’ve had a chance to review them. For those joining us for the first time, please allow me to take a moment to briefly introduce Fratelli Vineyards. We are one of India’s leading premium wine companies with a presence across 29 states and Union territories. Our diverse portfolio spans both value and premium segments. Catering to the evolving preferences of Indian consumers. With over 400 acres of vineyards under active farming and nearly 1000 acres under long term partnerships.
Our operations are backed by more than 15 years of viticulture expertise. Our fully integrated facility in approach Maharashtra spanning vineyards to bottling ensures consistency, scale and uncompromising quality. In recent years we have undertaken strategic investments in infrastructure, brand and people to build a strong foundation for scalable sustainable growth. We are now a future ready wine company with a clear focus on long term growth. As we step into FY26 consumption is looking promising, supported by improving macroeconomic indicators and a young population with aspiration consumption patterns. These are encouraging trends that closely align with Fratelli’s long term vision and commitment to a luxury and premium wine company.
On the regulatory front, Maharashtra’s recent excise duty hike on spirits caused a temporary disruption in wine sales while excise duties on wine remain unchanged and this is beneficial overall for the wine businesses. Additionally, the UK India Free Trade Agreement came into effect this quarter. Although its full impact is still unfolding, we do not expect it to have any negative impact on sale of Indian wines. That said, we are seeing continued traction in aspirational and luxury led consumption. Our flagship labels Setay and Junoon continue to gain market share within the luxury segment which grew 15% in Q1 FY26 and now contribute 6% of our top line.
The master selection range in the Super Premium segment also recorded steady Progress this quarter around 6% to revenues. @ the same time, we are deepening our presence in tier 2 and tier 3 cities and enhancing reach in regions with traditionally low wine consumption. The premium portfolio remains the anchor of our brand identity. While innovation continues to unlock newer audiences, we remain committed to unlock India’s untapped potential of wine and increasing tam. A prime example of step that we have taken in this direction is the launch of Shotgun, our crafted wine RTD Offering launched in February 2025.
Within just three months it has secured a 5% market share in tracked states and is now present in nine domestic markets. The overall RTD industry grew 29% in Q1 and with the 400 crore addressable market in wine RTD, we see significant headroom for expansion and sustained momentum for Shotgun. While we continue to grow in the core wine segment, Shotgun represents an additional vertical, a new opportunity designed to strategically deepen our penetration in tier 2 and tier 3 cities as well as in regions where wine consumption is still at an ascent stage. Meeting evolving consumer expectations for convenient, high quality beverages, we are targeting presence across 15 states for shotgun by the end of FY26 on wine in a CAN format Tilt continues to build relevance across emerging urban markets.
We are among the few players actively shaping a modern wine culture in India, one that resonates with younger lifestyle driven consumers. We continue to be market leaders with the dominant market share in the wine in can format. I am pleased to inform that the company has invested approximately 70 crores in due FY23 to FY25. These investments have gone into fixed assets like expansion of winery building New state of the art equipment and vineyards. We have approximately 12 crores of capex planned in FY26 as well and this will largely complete our Capex cycle for capacity expansion required for envisage growth over next three to five years.
Also, we are at the planning stage for our wine, tourism and hospitality vertical. Over the next two to three years we expect to invest around 100 crores in hospitality in Maharashtra and we plan to set up our own winery in Karnataka. These investments will not only diversify our growth but also deepen consumer engagement. Our focus remains steadfast in top line growth and margin expansion. With that, I’ll now hand over to Aditya to take you through the financial and operational highlights for the quarter.
Aditya Sekhri — Director
Thank you and good afternoon everyone. This quarter’s performance reflected steady operational progress alongside near term challenges. Net sales declined 16% driven by a temporary slowdown in urban consumption and deliberate supply chain optimization to protect wine quality in Maharashtra, a key market for Fradeli. The revision in spirit prices following excise duty changes caused a temporary disruption that affected wine sales even though the excise duties on the wine itself are not changed. In Q1 FY26, the premium and above segment continued to make progress contributing over 70% of total sales, underscoring the brand strength in the high value space.
Friteri’s recent new launch, Pinot Noir, one of the world’s most popular wine varietals launched in July 24, is now available in more than thousand plus outlets across the country. The company continues to command roughly 1/3 share of the Indian wine market supported by its portfolio of premium offerings. Gross margins continued their upward trajectory delivering an improvement of 700 basis points supported by disciplined cost control and operational efficiency. EBITDA margins were softer reflecting increased investments in shotgun and other long term initiatives such as category development, infrastructure enhancement and brand building. Finance costs rose due to borrowings for capacity expansion while depreciation increased with the commissioning of new assets.
These investments are building capabilities and positioning us for future readiness. On the capacity front, we now have 5.5 million litres of winery capacity alongside a new 47,000 sq ft facility in Akloj. Plantation of 100 acres of new vineyards in Jambali is progressing as planned, strengthening our integrated value chain and ensuring consistent quality and supply. These capabilities make us well prepared for rising demand as we expect our offerings to extend our presence in newer geographies. Our international expansion includes entry into three new markets increasing our footprint to now 12 countries and two duty free zones in Delhi and Mumbai.
On the domestic front, we have established a presence in Chhattisgarh as well. Now bringing our total reach to 29 states and union territories. Operationally, we continue to sharpen efficiency in systems. Salesforce tracking now provides real time sales visibility and supply chain optimization measures are preserving product integrity across key markets. In line with our sustainability commitment, we. Have now installed 520 kilowatts of solar capacity meeting 50% of our electricity needs and generating annual savings of approximately 50 lakhs. As we look forward, our priorities are clear. Expanding the reach of RTD Shotgun, advancing our premium portfolio, Strengthening our hospitality vertical and widening our presence across markets. Supported by scalable capacity and established portfolio and a defined growth pathway, we are well placed to consolidate our position in the premium wine space. Guided by operational discipline and a long term approach, we aim to deliver consistent revenue growth and healthy margin improvement while shaping evolving consumer trends in wine consumption across India.
Our diversified portfolio and consistent focus on delivering superior wine experiences continue to enhance brand strength. Driving EBITDA improvement remains our key objective. We are meeting evolving consumption patterns and engaging new wine drinkers through innovative offerings like Shotgun and Tilt. Fratelli is expanding its reach by introducing such formats appealing to both seasoned consumers and novices. Alongside continued investments in capacity, brand building and systems, the foundation for sustained long term growth. That concludes my remarks. We may now open the floor for questions and answers. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aryan Oswal from Pinterest Capital. Please go ahead.
Aryan Oswal
Hello. Am I audible?
Aditya Sekhri
Sir, yes, absolutely. Please go ahead.
Aryan Oswal
Yes sir. So sir, I have few couple of questions. The first question is are there any new product launches planned for the coming quarters and how do they align with the company’s premiumization strategy?
Aditya Sekhri
Yeah, hi, Aditya here. I’ll take the question. So we have you know, recently just launched Pinot Noir. As I just mentioned, in the last fiscal year that continues to be a long term priority for the brand. And we of course look to increase it in more touch points in the next coming quarters. We have two major rebrands which are planned as well. One being the Grand Covid route for which you will be hearing more about in the subsequent quarter. And of course the major focus for this year will Be alongside our premium growth, getting shotgun in roughly 15 markets.
Aryan Oswal
Okay, got it. Sir. What is the estimated size of the addressable wine market in India and how do you expect it to evolve over the medium term?
Aditya Sekhri
The current market size for the Indian wine industry not inclusive of RTDs is roughly thousand crores for the domestic market and about 500 crores for the imported segment. At the moment, we as Stratelli are expecting the industry to grow at about 15 to 20% for the next three to four years. And we remain firm on that.
Aryan Oswal
Okay, so one last question. So were there any supply chain constraints such as grape harvest challenges or packaging shortages and how have input costs per liter moved year on year?
Gaurav Sekhri
Hi, Gaurav Sekri here. We have not had any challenges on the procurement of grapes or any major changes in the price of even grapes that we procure from outside or otherwise. Contracts are long term with farmers and therefore you will see there are no major changes in the gross margin profile of the company.
Aryan Oswal
Got it. Thank you so much. I’ll join Megan.
operator
Thank you. Thank you. The next question is from the line of Karan Kamdar from Choice Institutional Research. Please go ahead.
Karan Kamdar
Hope I’m audible.
Gaurav Sekhri
Yes, yes. Please go ahead.
Karan Kamdar
Yes, sir. Sir, I just wanted to have your view on how you see the market as. Because it seems like the consumer is favoring imported brands. So how do we plan to challenge that and sort of get the consumer back to domestic wines?
Gaurav Sekhri
See, there is no denying that, you know, the general perception that we carry in India, not just for wine but even for other products, tends to be that, you know, what is imported is superior. And this is even more so in the case of wines. However, you know, the kind of quality that is being offered, especially by Fratelli and also by the other wine industry people in India. I think as and when consumers are trying and experiencing the product, they realize that at that price point the kind of quality that is being delivered by the Indian wine industry is far superior to imported.
So you’re right, there is a perception issue. But it has been overcome and it will continue to be overcome by just producing higher quality product.
Karan Kamdar
Got it, sir. Quite. Sir, on the hospitality front you announced. I think one in Maharashtra and one in Karnataka also. How do you see that and how much percentage of our revenue expect to. Contribute let’s say one, two years down. The line once it gets fully established.
Aditya Sekhri
See, firstly I’ll clarify. Our intention initially is to only roll out the hospitality venture in Maharashtra, not in Karnataka. In Karnataka, we expressed our desire to have our own winery at the moment we are working with a leased asset. So that is what we had mentioned. And regarding the revenue contribution from hospitality etc. It is a bit premature to talk about that today. Because we are at least two years away from that happening. I think it is better we discuss it down the road.
Karan Kamdar
Got it. Thank you. That’s it. From my side. Thank you for the opportunity.
Aditya Sekhri
Thank you.
Gaurav Sekhri
Thank you.
operator
Thank you. A reminder to the participants. Please press star and one to ask a question. The next question is from the line of Chetan from Systematics Group. Please. Please go ahead.
Chetan Sharma
Yeah. Hi. Thank you for the opportunity. Sir, could you share the EBITDA margin differential between our premium luxury SKUs and say our fast growing RTD product and are RTD’s accretive or dilutive at a gross margin level.
Aditya Sekhri
So I can. Aditya here, I’ll comment on this. So I can’t comment on the EBITDA margins but I can give you a view on the gross margins. Our gross margins or our premium and above brands are north of 70%. And they have remained so for the last three. Three years. On the. In the RTD segment the gross margins are relatively lower. We are operating between 65 to 70% gross margin in the RTD segment.
Chetan Sharma
Okay. Okay. Answer again. Second question. So if we see over 70% of our sales are from premium and luxury wines. So what is our internal target for this mix by say FY30 where we are targeting a 20% plus kind of margin.
Aditya Sekhri
So the overall mix may reduce as a whole. But when it comes to our bottles business, I definitely believe our mix will be 70% plus. You know, at least for the next five years from premium and above brands. But considering shotgun is a product in which our focus will be there. Therefore as a whole in terms of our overall top line it may drop to about 65%. But if we look at our bottles business as a whole it should remain above 70%.
Chetan Sharma
Okay. Okay. Got it. And so lastly I wanted to ask on the Maharashtra this wine promotion scheme. So do we have any estimated number like which we can expect in FY20?
Aditya Sekhri
See, the Maharashtra Wips scheme benefit is basically linked to the sales that you do in Maharashtra. And we are only in Q1 because that benefit is only applicable for sales within Maharashtra. But maybe our CFO can try and give you a range. Rajesh, would you like to maybe give an indication of range of the benefit we may expect this year?
Rajesh Garg
See Rajati side like Gauravji informed that. I mean it will too early to inform the projections. Which we’ll be having from Deep SE venue. But last year we booked around eight courts of the bad subsidy. So I mean it will look too early to say by the end of the year. But. But like we are projecting around 15 to 20 growth for the top line. So I mean similar baby may be excluded in the. In that segment also.
Chetan Sharma
Okay. Okay sir, got it. Thank you. Thank you so much.
operator
Thank you. The next question is from the line of Sham Garg from Navon. Please go ahead.
Unidentified Participant
Thank you so much for the opportunity. My first question is with respect to. How many RTD cases have been sold to date and what are the sales ramp up expectations.
Aditya Sekhri
So our plan, as I just mentioned, we’ve launched in about nine states already. Our endeavor is to do more than 1 lakh cases by the end of this financial year. But you know, we’ll be able to give a better update by end of Q2.
Unidentified Participant
Okay. And how many we have sold so far?
Aditya Sekhri
I will not be commenting on that as of now. Okay. But as I said, as I said. We have reached a 7% market share in the RTD space in Q1 already in states where data is available.
Unidentified Participant
Okay, got it. So my second question is with respect to how differentiated is our approach to tier 2 and tier 3 market compared with tier 1 market, particularly in terms of product development, packaging for example cans and RTDs and marketing.
Gaurav Sekhri
Hi Gaurav Sekri here there is no difference in the packaging at all between tier 1, 2 and 3. It’s very consistent and exactly the same. However, you know, our approach is a bit different for tier 2 tier 3 cities. There there is a larger effort need in getting consumers to try the product, sample the product and that is how we are sort of also putting our energy. But there is absolutely no difference in the product. Of course in tier 2 tier 3 cities the consumption is more skewed towards the premium to value range versus the, you know, the luxury range of products.
Unidentified Participant
Okay, so my next question is with respect to what is the cost optimization initiatives that have been planned for FY26 and how will they lead to margin expansion roadmap?
Gaurav Sekhri
So we have various initiatives underway. We had mentioned already about solar. We implemented solar energy in our facilities and that will result in savings. We’ve already given an estimate of that. We are also working on operational efficiency at the vineyards level, in the winery level, even supply chain optimization. So all of those things will result in savings. Here we are working towards a plan.
Unidentified Participant
Okay, so any absolute numbers or any expected margin expansion that we can expect from these plans.
Gaurav Sekhri
It will be very, I think it’s little sensitive. We consider that information diverge in that kind of detail. But certainly, you know, we expect it to improve about maybe 200, 250bps to EBITDA.
Unidentified Participant
Oh, nice. That’s great, sir. Thank you so much, sir for answering my questions. Thank you.
operator
Thank you. The next question is from the line of Manan Gandhi from Keystone. Please go ahead.
Manan Gandhi
Hello, Am I audible?
Aditya Sekhri
Yes, please go ahead,
Manan Gandhi
Sir. With more than 70% of the portfolio positioned in the premium segment, how might the launch of Tilt and short gun influence our overall mix? And how do you anticipate the revenue composition evolving over the next few years?
Aditya Sekhri
So I already answered this question. Premium and above brands will continue to consists of about 70% of our revenues when it comes to our bottles business. But considering the overall TAM in both the tilt and the shotgun segment, we see very good growth opportunities in those segments. And therefore our overall mix may come down to about 63, 65% from premium and above brands in this year if you look at overall revenue. But if you talk about only the bottle segment, it will remain north of 70%.
Manan Gandhi
Okay, okay, so just on a promoter. Holding side, one query like we were at 73.81% promoter holding and now we are like going down to 57%. So like what exactly would be the reason for the same? But the stock price is also falling since like quite a long time.
Gaurav Sekhri
So man and Gaurav sacri here. Firstly, the 73.81 odd percent that you saw was the promoter holding prior to the reverse merger Fratelli into the business. Since the time Fratelli has become the Holdco and 100% subsidiary of the listed entity, the promoter holding is consistent at just a shade below 58%.
Manan Gandhi
Okay. Okay, that’s it from my side. Thank you
Gaurav Sekhri
T hank you.
operator
T hank you. The next question is from the line of Dipesh Sancheti from Manya Finance. Please go ahead.
Deepesh Sancheti
Yeah, hi, am I audible?
Aditya Sekhri
Yes, Dipesh, please go ahead.
Deepesh Sancheti
Okay, what is the strategic rationale behind introducing a wine based RTD and how will it differentiate from the existing market offerings?
Gaurav Sekhri
So Gaurav Sakri here. Firstly, you know, wine based RTD as it suggests it is wine liquid and you know, we have, you know, more better expertise than anybody else in the country. We would like to believe in the making of wine and the vineyards, etc. So that that clearly gives us a competitive advantage. Secondly, our rationale of getting into wine rtds is to, you know, have one fast moving product within our portfolio which Expands us as a business beyond just the traditional wine consumption area, number one. Number two, it opens many new tier two, tier three market markets for us.
Increases our touch points because there are many small retailers as you can imagine, maybe in interior Maharashtra, interior Haryana, interior up where the sale of traditional bottled wine is possibly only, you know, maybe five or 10 cases over two or three months. So to service those markets can be a bit challenging. But with shotgun we can service them with higher frequency. So it gives us much better access to touch points and increasing time.
Deepesh Sancheti
Okay, and who’s currently leading the wine based RTD category in India? And how does Peter intended capture the market share and stand out from the competition?
Gaurav Sekhri
Sure. So there are. The clear standout leader in this segment is a product called Bro Code. And I think the others are not so relevant. They are much smaller. We have now, you know, thrown our hat in the ring as well and we expect to become, you know, brand to reckon with within our year one of launch.
Deepesh Sancheti
Okay, and when do you expect the. EBITDA margins to go back to 9 to 10% level? And what are the levers in place to drive that?
Aditya Sekhri
See for us it is really about, you know, the top line expansion and some operational efficiencies which will bring the EBITDA to even beyond 10%. But like, you know, there is some work cut out and involved in getting there.
Deepesh Sancheti
Okay, and how much of the Q1 FY26, I mean 76% year on year revenue drop was due to the volume decline, pricing changes or product mix shifts?
Aditya Sekhri
Again, I think just please, you know, recheck the numbers that you’re seeing regarding revenue decline because I think you are comparing the business of the Holdco, the listed entity prior to Fratelli was reverse merged into it. And that was a trading business with much higher revenues. So that would not be the right comparison.
Deepesh Sancheti
What would be the right comparison? Because I can see 150 crores. From 150 crores it has come down to 36 crores. So what would be the right comparison?
Aditya Sekhri
So you have to see the revenue. Of. The subsidiary company, which is Fratelli wines of Q1 last year and compare that to Q1 of this year.
Deepesh Sancheti
How much was it? If you can just quantify the numbers.
Aditya Sekhri
So Q1 last year versus current year there was about a 15% dip in net sales. If you compare Q1 last year versus this year on a Q1 Q basis, we’re 13% AB the previous quarter that just got concluded. Okay, which is Q4 of FY25.
Deepesh Sancheti
Right, right. So just want to understand, you know, when will the actual, you know, growth come from? Because I’m sure that you, you won’t be very happy with a 36 crore or you know, every year quarter sales. So when will the actual growth come and where is it? What about to be the growth drivers for the company?
Aditya Sekhri
See we are, we are firm, we. Are firm this year that we will deliver 15 to 20% top line growth. And there are still three quarters which are left. In fact up to May we were 5% above previous Q1. But as you know due to the changes that happened in Maharashtra there was a dip in sales in June which impacted us. But Q2 onwards you will be seeing that recovery.
Deepesh Sancheti
Q2 onwards. And what about when we have the free trade agreements with UK and maybe with EU also since, I mean when those kind of wines will actually flood the Indian market, I mean maybe it will be a long process. Of course it is mentioned that it will be 10 years for the zero duty to come into place. But still, once the Indian market is open for these bigger players, how do we see ourselves to maintain the market share and even increasing it? Whether acquisition will be or how it is going to be? As the management thought about all this.
Aditya Sekhri
Yes, absolutely. I think it will be not correct to think about this eventual change which may happen. See this change as and when happens, as you’ve seen in the case of Australia as well, really impacts those wines which are above 3,500 or 4,000 rupees in price point. Our most expensive wine at the moment which is Junoon is 4000 rupees. So as and when this gets implemented, we still have enough time and we believe that the segment up to about 2000 or 2500, which is where Fratelli operates in and looks to grow in over the next five years is fairly well protected even with these FTA coming in place.
Deepesh Sancheti
Just one suggestion. I mean, I mean of course it’s your decision, of course at the end. But just one suggestion. Can we have, you know, change in the names of your wines? Because you know, having an Indian, I mean it’s always the perspective that you know, whenever you have a Spanish name or Italian name, these are the premium wines. I mean Junoon is more of a, you know, Indian name and I mean nothing to go against it but it’s, it’s always that perception. So has the company thought of it, you know that you know, when we are launching premium wines, maybe keep, you know, these kind of, you know, change the name to Italian names.
Most of the builders are also doing that. So just want to understand if you know what, what do you think about it?
Gaurav Sekhri
No, thank you. We appreciate and welcome suggestions. We will take note. This is Gaurav Sekri here, if you will notice. So I’ll spend maybe 30 seconds on it. All the branding in any kind of alcobear space, especially in the luxury segment has to have some strong personal connect. And the background of Sete is essentially seven in Italian and we were seven original founders who had started the company. So that is why the name Setay and master selection is very international. But I think our most premium offering, Janoon is, you know, we chose Janoon to reflect the obsession passion that we have about the business and the company and it’s been received extremely well.
So I think as of now we’ve got our strategy right on the names but we will certainly keep your inputs in mind as well.
Deepesh Sancheti
Yeah, and just one more question. I think on the last phone call I had mentioned about a drink called a Tinto di Verano, which is a very Spanish local drink, you know, which is available in every shop as small ready to drink bottles, also in 2 liter bottles and in cans. Are we planning something like, you know, that kind of taste which, you know, the younger generation can just pick it up and have, I mean, to get them introduced to a more sweeter wine taste as a cocktail waste. Have you thought about it?
Aditya Sekhri
So all I can comment on that is, you know, we have been the most progressive wine business in the country. Whether it was wine in a can which was started that was, you know, that product is meant to connect with the new consumers who are, you know, maybe you know, who are vegan because it’s a vegan product. It’s, you know, packed in the most environment friendly packaging and a very, very tasty beverage. I hope you have tried tilt. If not then please try it and now with shotgun as well. So we are, we are not shying away from any opportunity, you know, to innovate in this industry.
In fact, I would like to add that we are the first company to also launch a peach flavored wine called Mosso which was launched keeping the market in northeast, you know, with that focus. So we are, we are innovating all the time. But we appreciate your suggestions.
Deepesh Sancheti
Okay. And about our reach, how, how many states are we present in or we are having a Plan India presence.
Aditya Sekhri
29 states as of now with the launch in Chhattisgarh and approximately 25,000 touch. Points in the country.
Deepesh Sancheti
Great. So almost pan India.
Aditya Sekhri
Perfect.
Rajesh Garg
Thank you guys. All the very best.
Aditya Sekhri
Thank you.
operator
Thank you. The next question is from the line of Amit Mehenday from Robocapital. Please go ahead.
Amit Mehendale
Thank you. Thanks for the opportunity. So my first question is on our capital requirements. So our long term goal is to hit say 500 crores of revenue. What type of capital do we need additional capital to get there?
Gaurav Sekhri
Hi, Gaurav Sekri here. As I mentioned in my opening remarks as well, with the capex cycle we have undertaken from FY23 to 25, approximately 70 crores and another 12 crores that we are spending this year. We are very well equipped to cater to growth for next three, maybe even five years in terms of capacities, equipment, you know, all of that is in place. Of course, if business grows even beyond that then that’s a good problem to have and we can revisit it. So aside from that, the only major capex that we now intend to do is relating to our hospitality business and possibly setting up a new greenfield winery in Karnataka.
Amit Mehendale
And I’m just kind of interpreting the answer that till 500 crores or so we don’t need any additional capital but maybe to hit maybe 700, 800 or beyond 500, we’ll need capital.
Gaurav Sekhri
Yes, yes, you can assume that. Right.
Amit Mehendale
And the next. Thank you for that. And the next question is on the, you know, hospitality business. You know again I think the suggestion there or you know would be, you know, we have invested. So if you look at the core business, we have invested about you know, 150 crores or so and then the business is scaling up. So how do we see, you know, adding 100 crores to a non core business, you know, diversifying from a non core activity, you know, putting attention time there. Also that the business is, you know, typically hospitality is a low roe business.
So how, you know, how, why, why are we doing that?
Gaurav Sekhri
Your, your question is extremely valid. And you know we have not done hospitality T and we’ve been in the business for 15 years is for the exact same reason that we wanted to first focus and get our core business to scale which has been achieved. Hospitality is very attractive on two fronts to a wine business. One, because it tremendously helps with brand building as you know, as any alcobe business. We also have large budgets for brand investments which we spend every year. The affinity a consumer builds to a brand when they visit etc. Is very strong.
This is a global concept. And also the sale of wine ex winery to the people who visit is also an attractive proposition. And for these reasons it is a good idea, we feel to be in the wine related hospitality business and we are inclined to have an operator run the property for us so that we don’t have to go through the learning curve of getting familiar with hospitality. I’ll also just clarify, I’ll also clarify our budget for hospitality is not 100, it is actually we are expecting to not spend more than 70 or 75 crores.
Amit Mehendale
Right sir. So there the suggestion would be, you know, our competitor also has a similar, you know, offering on hospitality on a much smaller scale. So I think the, from whatever we understand that the core idea looks, you know, quite promising but just that the size of capex in non core activity as compared to the core activity looks a little higher. So maybe, you know, just, you know, I’m just giving you a suggestion to not.
Gaurav Sekhri
Fully appreciate and totally appreciate what you’re saying and we will consider all options. We are very, very judicious on capital allocation. As you know, as promoters we, we have our skin in the game and fairly high promoter holding in the company as well. So we will certainly keep what, what you are seeing in mind.
Amit Mehendale
Thanks. And my last question is, you know, strategic like how do we see you know, roe for this business, you know, many years out, like you know, five, seven years out. And my question is, you know, we are starting, we are tracking this company fairly recently. So you know, if you compare say a wine business roe to us, say you know, you know, other alcohol business roe, will the wine business typically have a lower roe because of the requirement for large land for cultivation etc. Is that a fair assessment.
Gaurav Sekhri
The roe per se overall in wine business? My assessment also today at least is the same, will be probably a little lower than the spirits business. This is a patient capital business where long term value is being created. The positive of a wine business is worth mentioning here as well. Is that the very strong entry barrier of time. So while people can consider starting a spirits business, a gin or a whiskey and probably have a product out fairly quickly, wine has a very long gestation period with firstly understanding viticulture, waiting for the right harvest and then building the brand.
We have I believe learned that very effectively probably in the best way in the country. And that is why today, if you see the 85 or 90% of India’s wine is essentially a duopoly between us and the market leader. So it has very, very strong entry barrier. And that is an attractive proposition once you’re in the business us.
Amit Mehendale
True. Great sir, thank you very much. That’s it from My side. Thank you.
operator
Thank you participants. To ask question please press star and 1. The next question is from the line of Sh Verma from rest Assured Group. Please go ahead.
Kshitij Verma
Hi, am I audible?
Aditya Sekhri
Yes, please go ahead.
Kshitij Verma
Hi, thanks for having me on the call. My question was why have we gone for a more catholic heavy participation in the hospitality business? Because I believe our competitors are going on a more asset light model where they are paying a fixed rental with the increment for a longer term and while they are managing the hospitality part which looks much more scalable vis a vis us going for a capex heavy plan. Could we just have a thought about you?
Aditya Sekhri
Sure. So firstly, I think there is need for you to just revalidate I think some of your assumptions. You know our nearest competition here in the business has also invested in hospitality. In fact they have about 100 key inventory of their own which is owned by them. We are only proposing to do probably around 40 key kind of property to begin with. And after doing that they are now working on a model of where someone else is building I think the new inventory which they will manage. But I think they are in a better position to answer that.
I can comment you only about us where you know, for our core business and core purpose of brand building we believe we need to, you know, invest in the initial 40 key property and there is an attractive payback and very supportive of our core business and that is why it is being considered.
Kshitij Verma
Okay, sir. And I just wanted to know that, you know, in some foreign countries I had observed that when the harvesting of the grapes are done and you know it is sent to for making a wine post the production of wine they sometimes reutilize the leftover to even make a grape based brandy. Like in Georgia they call it chacha or something which is even using the end material. Is that a possibility with the grapes we are growing or that is not a possibility in future if we want to have a product line expansion or something of that.
Aditya Sekhri
You’re absolutely right. Grape skins are used for brandy very commonly all over the world. But it’s a different skill set never down the road. Certainly we can consider it. But as you know in India once you get into a brand deal which is a kind of spirit, then it needs a whole different set of licenses and different kind of regulation controls at this point.
Kshitij Verma
Okay, so. And the last query from my side is sir, you know, in the past we’ve heard from, you know, people that regulation is different for each state as far as alcohol is concerned. And you know, has there Been any changes in terms of how they perceive wine industry and are the bureaucrats looking at the industry in a more positive.
Aditya Sekhri
See, we would like to believe that wine continues to be looked at a more favorable light within the alcove space. That is why wine and beer sales are permitted more liberally compared to spirits even in many states. Some general stores permitted. At least one state today already allows placing order via app and I know one or two other states are considering that. So the perception of wine is more friendly within the alcove perception. But alcoheb overall, you know, still I think some social stigmas, etc. We need to overcome which will happen with time.
Kshitij Verma
So just one last suggestion. There are certain wine based influencers I have observed that have lot of huge following. So you know, if in the future Fratelli can consider maybe having their own mother. We already have an Instagram page I believe but you know, we might have a more exclusive content which, you know, the regular consumers can relate to and it is published across social media more aggressively and we can, you know, maybe scale up our following to some of the wine influencers. It can indirectly maybe help in marketing if it is permitted by regulation and all.
It’s something you all can consider from my side.
Aditya Sekhri
Yeah, the suggestion is well taken. We at the moment are 62,000 followers on Instagram and we’ve grown from about 50,000 last year, which clearly shows that our engagement and our following has been increasing with respect to collaborating with influencers in the wine community. We have been doing so already in the last four to five months itself. We have collaborated with several wine and not only wine, but other general influencers as well who are relevant to our category and we’ll continue to do the same.
operator
Hello.
Kshitij Verma
That’s it from my side. Thank you.
operator
Thank you. The next question is from the line of Harshal Sheth, an individual investor. Please go ahead.
Unidentified Participant
Hello?
Aditya Sekhri
Yes, Harshal, please go ahead.
Unidentified Participant
Hi. So I just wanted to know. We’ve been hearing about price war in the wine market. So when will Fertelli take a price hike? And when can we expect the EBITDA. Margin to be close to the market leader, which is 25 to 30%.
Aditya Sekhri
Yes, we have taken some price rises this year and that’s a strategic decision which we are always considering. And as I just mentioned, we have taken some price rise this year and we continue to evaluate that on an ongoing basis.
Unidentified Participant
Okay. And. Do we see any equity raising in the future?
Aditya Sekhri
It is hard to comment on that at this point of time, sir.
Unidentified Participant
Okay, that’s it from my end.
operator
Thank you. The next question is from the line of Amit Mehendare from Robo Capital. Please go ahead.
Amit Mehendale
Thank you sir. This is just a follow up on the hospitality. I think there was a comment earlier that the payback is reasonable there. So I’m just looking for some range for payback period for hospitality.
Aditya Sekhri
See the hospitality business related to wine the payback is more attractive than the traditional hospitality business primarily because of the sale of wine ex winery and you know we are still working some of those details out and and I think it will be premature for me to share that in this concord today.
Amit Mehendale
Okay, thank you.
operator
Thank you. The next question is from the line of Dipesh Sancheti from Manya Finance. Please go ahead.
Deepesh Sancheti
Yeah, so just a follow up on your debt. How much is the debt right now? How much of it is term loan and how much of it is working capital? And going ahead how much capex are we planning especially in our hospitality segment and our core business.
Aditya Sekhri
Our debt today is approximately 30 to 35 odd crores term debt and our CFO can give you more accurately and we have approximately 70 odd crores of working capital and that is where we stand today. And regarding the hospitality our intention is to probably spend in the range of between, you know, 65, maybe 75 crores. Like I said we are still working out the plans and even in relation to that the funding of it etc are yet to be worked out and I think over the next one or two quarters we can give you more clarity.
Deepesh Sancheti
So I mean in one of the next two quarters are we planning a fundraiser or something from the market?
Aditya Sekhri
I will not rule it out. Let me put it like that. With the, you know, as and when we are going ahead with some of these new capex projects I will not rule that out. In regards to our existing core business we are adequately funded both on the debt side. We are comfortable with our debt profile as well as our existing business. So I don’t see any need for that to come to the capital market. Because I mean it would make a very. It would make sense because the Stock is at 52 week low and for the promoters also and for new investors, bigger investors to come and come in at this rate. I mean it will be a great perspective
Deepesh Sancheti
But we just wanted to understand what is the cost of debt.
Aditya Sekhri
We are at around 10%.
Deepesh Sancheti
10%. Okay. Okay, thank you. Thank you so much.
Aditya Sekhri
Thank you.
operator
Thank you. Participants, to ask a question please press star and 1. The next question is from the line of Shitaj Varma from Rest Assured Group. Please go ahead.
Kshitij Verma
Yeah. Just one follow up question sir. Do we when we do borrowings, do we get any preferential status because you know our industry is directly linked to the benefit of the farmers who grow. Do we get any preferential rate in this?
Aditya Sekhri
Unfortunately, no. While you know yes this business, it directly benefits farmers. Government still I think or banks view it as an alcohol business. So our borrowings, I wish you know they would consider this what you are suggesting and give some priority sector lending. But that is not applicable to us.
Kshitij Verma
Oh, that’s fine.
operator
Thank you ladies and gentlemen. As there are no further questions, I now hand the confidence over to the management for closing comments.
Aditya Sekhri
Thank you very much for everyone who participated and listened into our earnings call today. We wish you a very very nice day and thank you again for your interest in our company.
operator
Thank you ladies and gentlemen. On behalf of Go India Advisors and Fratelli Vineyards Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your line.