Chapel Down Group‘s (LSE:CDGP) an AIM-listed penny stock that’s ebbed and flowed since the winery’s IPO (initial public offering) two years’ ago. There have been several twists and turns, including strong harvests, poor harvests, and a denial that the group was seeking a sale. Yet one of Britain’s best-known City figures clearly sees value at these levels.

A billionaire tops up

Since I last covered this stock, Lord Spencer of Alresford, the billionaire founder of inter-dealer broker ICAP, has increased his already hefty stake in Chapel Down.

Recent filings show his investment vehicle, IPGL, bought another 450,000 shares, taking his holding to more than 27%. That cements his place as the company’s largest shareholder — ahead of serial investor Nigel Wray on 13.8%.

Spencer will soon move from non-executive director to chair, following Martin Glenn’s planned departure in September. The board’s also bringing in former Britvic CEO Simon Litherland as an independent director. That’s a strong drinks-industry CV to add to the table.

A growing business in wine

Kent-based Chapel Down cultivates over 1,000 acres of vines, of which at least 750 are fully productive. It supplies still and sparkling wines to high-profile partners including Ascot, The Boat Race and the England and Wales Cricket Board. Sparkling wine’s the strategic focus, making up 70% of revenue.

The first half of 2025 brought an 11% rise in net revenue to £7.9m, with growth driven by a 30% jump in off-trade sales — that’s retail, rather than bars and restaurants — thanks to new supermarket listings, better shopper marketing and a strong Easter campaign.

Meanwhile, international sales rose 17% to £500,000, helped by new partnerships in the US and Norway. On-trade sales rose modestly, but direct-to-consumer revenue fell 7% after last year’s one-off promotions weren’t repeated.

Chief executive James Pennefather, who joined from The Lakes Distillery in November, said Chapel Down entered 2025 with “strong momentum” and remains confident of hitting full-year expectations.

The company retains headroom under its £20m credit facility. However, net debt rose to £11.3m as it invested in new vineyards and inventory from the 2024 harvest.

Valuation and potential

On 2025 estimates, the shares trade at about 4.6 times enterprise value (EV)-to-sales and a steep 25 times EV-to-EBITDA. That’s not cheap on near-term earnings — but those multiples could compress quickly if revenue continues to grow at a double-digit clip and margins normalise.

The real attraction here is operating leverage. Vineyard planting takes years to mature, but with over 1,000 acres already in the ground, the business has the capacity to scale without proportionate cost increases.

While there’s a lot to like here, the outlook’s relatively uncertain. Weather patterns are unpredictable and can greatly impact harvest size and quality. As such, analysts don’t appear to have an earnings per share (EPS) forecast for the company. Collectively, these factors introduce an element of speculation.

For me, it’s a stock that’s simply going to remain on my watchlist. I do have some belief that the stock could offer long-term appreciation as its acres mature, potentially making big-sum investors millionaires. However, it may be too speculative for me in the near term.