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Published on 13/06/2018 2:36:09 PM | Source: GEPLCapital Ltd

Buy Wonderla Holidays Ltd For Target Rs.1,195.00 - GEPL

Posted in Broking Firm Views - Long Term Report| #GEPLCapital Ltd #Broking Firm Views Report #Travel Agency #Wonderla Holidays Ltd

Company Snapshot

Business: Wonderla is a market leader in a nascent industry, amusement parks in India. It currently operates three amusement parks each in Bangalore, Kochi and Hyderabad and is in a process of establishing one more park at Chennai which is expected to be operational by FY 2020.

Management: It is promoted by the legendary businessman of South India, Mr. Kochouseph Chittilappilly who has built V-guard and Wonderla from scratch. Wonderla is managed by the second generation Mr. Arun K. Chittilappilli and share the passion for business as Mr. kochouseph . Management seems highly Competent, Visionary and Ethical.

Why Wonderla: Investment Thesis:

1. Unused Land bank and its Huge Qualitative Source of Advantage:

A: Let’s say some smaller park in vicinity of Wonderla has a land of 30 acres which is similar to land size on which Wonderla is operating currently. Wonderla Bangalore has a land size of 90 acres out of which only 30 acres is developed. So Wonderla has huge room to grow number of rides on this unused land. Smaller park doesn’t have this extra space. Now let’s see from the perspective of Customer Experience. Number of visitors would go up at this park due to favorable publicity by mouth if customer experience is good. But as the park doesn't have any extra space it cannot add more rides. This will lead to more number of visitors per ride on any given day, which would turn into more waiting time in a queue per ride, eventually worsening Experience of all visitors. Contrast this with the Wonderla and huge extra land it has to place new Rides. As popularity of the park goes up, number of visitors will go up. Wonderla will keep on adding new rides every year. With more number of rides, number of people per ride would remain at same level, thereby not impacting experience level with long queues and other service issues of other park. This will result in a consistent experience at Wonderla as against inconsistency of it at other parks. As this is an Experience Business, Parks have to impress its visitor every time and failures to do that once will make its visitor go away. This will make life of smaller and less professional parks much more difficult and they will see number of repeat visitors drying up with time as these visitors switch from smaller and unprofessional parks to larger and professional parks.

B. New rides well help Wonderla in marketing and branding. It helps repeat foot-fall by creating a buzz and excitement about new rides. At the same time it also helps grow new customers.

C. Having unused land for further expansion adds barrier to entry for New players. With addition of every new ride it becomes increasingly difficult for new players to beat the Experience and Variety of Wonderla, thereby deterring new players to open new parks in the vicinity of Wonderla parks. We can see this theme at Kochi park which started with 10- 12 rides and now boasts a total of 62 rides. Similarly Bangalore park started with 25 rides and now provides a variety of 59 rides. Company also set up new Interstellar ride that spans over the land of almost 3 acres at Hyderabad Park. The response is very good and company is planning to replicate this ride at other parks as well. Having multiple parks help company experiment with new ride at one park and then roll it out to others if it is successful.

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