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Sula Vineyards Ltd's initial public offering was oversubscribed on Wednesday with bids worth 15.65 billion rupees ($189.63 million), although some analysts had expected still more demand for India's largest wine producer.

Investors had bid for 43.8 million shares by the final day of bidding, 2.33 times the 18.8 million shares on offer, with institutional investors showing the most interest, exchange data showed.

It is targeting a valuation of up to 29.13 billion rupees in India's first IPO by a pure winemaker, tapping a rise in consumption since the pandemic in a country that prefers beer, whisky and country liquor.

Sula aims to raise a total of 9.6 billion rupees, including 2.88 billion rupees already raised from anchor investors such as Abu Dhabi Investment Authority and Goldman Sachs.

Institutional buyers bid for over four times the shares reserved for them, while retail investor subscription was at 1.65 times. The price range for the IPO was between 340 rupees and 357 rupees.

"We are a little surprised by the subdued response to the IPO, given the very strong brand Sula offers and the fact that there's a big runway of growth for a brand like this," said Motilal Oswal equity strategist Hemang Jani.

Jani added Sula could offer tremendous growth given its positioning in the market, with a limited number of players having the ability to disrupt the brand.

Analysts have previously said Sula could see outsized growth in the coming years as people perceive wine to be a healthier alternative to spirits and accept it as a social drink. Wine currently makes up less than 1% of alcohol consumption in India against the world average of 13%.

However, other brokerages have noted that international brands could become cheaper following a potential removal of high import duties. In addition, Sula's financials are not attractive as it only recently turned profitable, they said.

Sula will debut on the stock exchanges between Dec. 20 and Dec. 22.

($1 = 82.5280 Indian rupees)