Published on 25/05/2019 9:43:15 AM | Source: Religare Securities Ltd

Buy Wonderla Holidays Ltd For The Target Rs.377 - Religare Securities

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Riding gradually

Wonderla Holidays Ltd (Wonderla) posted decent set of numbers for Q4FY19, in-line with our expectation. Its net revenue increased by 10.4% yoy, driven by 7% growth in footfalls. The company’s EBITDA and PAT improved by 157bps and 490bps yoy respectively due to increase in overall revenue, decrease in employee expense and increase in other income. Going forward, we remain positive on the company’s growth prospects on back of improvement in overall demand and increase in footfalls across all parks. We recommend a Buy on the stock with target price of Rs 377.


Q4FY19 Result Update:

* Wonderla’s net revenue grew by 10.4% yoy to Rs 60.6cr, led by growth of 6.8% in footfalls. Among the three parks, Bangalore witnessed healthy growth of 10% in footfall, while footfalls in Kochi and Hyderabad Park grew 5% each. Further, the company’s ticket and non-ticket revenue grew by 8.8% and 14.1% yoy respectively. Besides the company’s Bangalore resort performance improved during the quarter. It witnessed revenue growth of 25% yoy, as well as substantial rise in occupancy rates from 32% in Q4FY18 to 52% in Q4FY19. Going forward, strong growth momentum is expected to continue from all the three parks and resort on the back of rise in footfalls, increased consumer spending on non-tickets expenditure and long stays in resorts.

* The company’s gross profit grew by 10.6% yoy to Rs 53.7cr, its gross margin improved marginally by 17bps to 88.5%. It posted EBITDA of Rs 17.9cr, increase of 16.6% yoy and its EBITDA margin expanded by 157bps yoy to 29.5% led by growth from non-ticket revenue (14.1% yoy). Its PAT grew by 91.5% yoy to Rs 7cr and PAT margin improved by 490bps yoy to 11.6% on the back of increase in other income (+98.4%).


* Concall Highlights:

1) Wonderla’s FY19 net revenue grew by 4.2% yoy to Rs 282cr, while EBITDA and PAT margin improved by 760bps and 543bps yoy, led by decrease in other expense and increase in other income. 2) Management said that both Bangalore and Hyderabad parks are growing on expected lines, while Kochi has stabilized after the floods. Further, it expects an improvement in both revenue and footfalls across all the three parks. 3) The company is waiting for necessary approvals from Tamil Nadu government, for its new project in Chennai. 


Outlook & Valuation:

Wonderla is one of the India’s most popular amusement parks, which is well placed in leisure segment. The company has three parks and one resort operational in Bangalore, Hyderabad and Kochi. We believe the company’s parks and resort revenue will be driven by increasing consumer demand, higher discretionary spending, pickup in footfalls, increase in non-ticket revenue and promotional & marketing activities. Notwithstanding the near term pressures, we expect a healthy revival in revenue and footfall from Kochi Park going ahead. We remain positive on the company’s growth prospects and expect its Revenue, EBIDTA and PAT to grow at CAGR of 5%, 6.1% and 6.4% respectively over FY19-FY21E. Going forward, if there would be remarkable changes in footfall revenue then we may revise our financials post 1-2 quarters. We recommend a Buy on the stock with target price of Rs 377. 


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