Tzone Direct's research report on Wonderla Holidays
Wonderla Holidays (WHL) reported a mixed set of Q1FY17 numbers. Revenues increased 32.2% YoY to Rs 88.9 crore (above I-direct estimate of Rs 82.5 crore) led by 17.9% YoY increase in realisation and 12.2% YoY increase in footfall on account of addition of the new park at Hyderabad. Bengaluru park revenues increased 9.0% YoY to Rs 44.4 crore while revenues from Kochi park declined 7.5% YoY to Rs 22.0 crore mainly led by 24.4% YoY decline in footfall. Hyderabad park reported revenues of Rs 19.3 crore. Resort revenues increased 11.3% YoY in Q1FY17. A high entry barrier due to huge capital investment and limited number of large amusement parks in India coupled with favourable demographics and rising discretionary spend augur well for WHL. We expect it to witness a sharp improvement in footfall and realisation led by addition of new parks and favourable demographics. Further, WHL has been able to generate higher cash flow driven by healthy margins at mature parks. As a result of high cash flow generation, the company has been able to keep its debt to equity lower and also been able to expand through internal accruals. Further, we believe that a healthy balance sheet (0.3x D/E vs. 1.46x for Adlabs), strong cash flow generation and revenue & EBITDA CAGR of 30.7% and 37.5%, respectively, in FY16-18E demands premium valuations. We have arrived at a DCF based target price of 460.
Wonderla Holidays (WHL) reported a mixed set of Q1FY17 numbers. Revenues increased 32.2% YoY to Rs 88.9 crore (above I-direct estimate of Rs 82.5 crore) led by 17.9% YoY increase in realisation and 12.2% YoY increase in footfall on account of addition of the new park at Hyderabad. Bengaluru park revenues increased 9.0% YoY to Rs 44.4 crore while revenues from Kochi park declined 7.5% YoY to Rs 22.0 crore mainly led by 24.4% YoY decline in footfall. Hyderabad park reported revenues of Rs 19.3 crore. Resort revenues increased 11.3% YoY in Q1FY17. A high entry barrier due to huge capital investment and limited number of large amusement parks in India coupled with favourable demographics and rising discretionary spend augur well for WHL. We expect it to witness a sharp improvement in footfall and realisation led by addition of new parks and favourable demographics. Further, WHL has been able to generate higher cash flow driven by healthy margins at mature parks. As a result of high cash flow generation, the company has been able to keep its debt to equity lower and also been able to expand through internal accruals. Further, we believe that a healthy balance sheet (0.3x D/E vs. 1.46x for Adlabs), strong cash flow generation and revenue & EBITDA CAGR of 30.7% and 37.5%, respectively, in FY16-18E demands premium valuations. We have arrived at a DCF based target price of 460.
