IGI Logo

Better days lie ahead

Wonderla Holidays (Wonderla) saw Sep’21 footfalls bouncing back to pre-Covid levels (adjusted for capacity constraints) after extended park closures between Apr-Aug’21 owing to the second Covid wave in India. With a net cash balance of Rs0.8bn as of Sep’21 and continued uptick in footfalls across parks with the onset of the festive season, we believe that the company is well positioned to tide over an extended recovery period in H2FY22-FY23E. We model for footfalls across parks to recover to 75% of FY20 levels in FY23E and 100% in FY24E and EBITDA of Rs0.8bn in FY23E and Rs1.1bn in FY24E vs. FY20 EBITDA of Rs1.0bn. We upgrade our rating to BUY from ADD as we roll forward our valuation to Sep’23E (earlier Mar’23E) with a revised target price of Rs294 (earlier Rs236) valuing the company at 16x Sep’23E EV/EBITDA. Key risks to our rating are extended park closures in FY22E and slow recovery in footfalls and pricing.

* Recovery in Sep’21 footfalls an encouraging sign: The company’s amusement parks were closed for operations between Apr-Jul’21 owing to the second Covid wave in India. However, with the second Covid wave receding, as per the unlock guidelines by respective Indian State Governments, the Hyderabad park re-opened on 5th Aug’21, followed by the Bengaluru park on 12th Aug’21 and Kochi park on 1st Sep’21. From Sep’21, the Bengaluru and Hyderabad parks have been operational on all days of the week while the Kochi park which was open for four days a week in Sep’21 is now operational on all days from Nov’21. The company clocked footfalls of 147,526 in Q2FY22, of which ~94,000 were in Sep’21 alone with the Bengaluru park seeing capacity adjusted footfalls above pre-Covid levels and Hyderabad park achieving pre-Covid footfalls. While the company initially offered discounted ticket prices of Rs799/day, it has now almost moved back to ticket prices which are 4-5% lower than pre-Covid ticket prices. With the ongoing festive season in Q3FY22 seeing continued uptick in footfalls, the company management expects revenues to return to pre-Covid levels by Q4FY22. A third Covid wave across India may delay this recovery.

* We build-in recovery to pre-Covid EBITDA levels by FY24E: While the continued momentum in footfalls is encouraging, we model for footfalls across parks to recover to 75% of FY20 levels in FY23E and 100% in FY24E and EBITDA of Rs0.8bn in FY23E and Rs1.1bn in FY24E vs. FY20 EBITDA of Rs1.0bn.

* Liquidity position remains comfortable with a debt free balance sheet: While it is difficult to estimate the exact time when the company’s amusement parks return to pre-Covid footfalls and revenues, with the company having a debt free balance sheet and cash and liquid investments of Rs0.8bn as of Sep’21, we believe that the company is well cushioned to tide over a prolonged recovery period in FY22-23E.

To Read Complete Report & Disclaimer Click Here

or More ICICI Securities Disclaimer https://www.icicisecurities.com/AboutUs.aspx?About=7

Above views are of the author and not of the website kindly read disclaimer