ICICI Direct is bullish on Wonderla Holidays has recommended buy rating on the stock with a target price of Rs 380 in its research report dated May 20, 2019.
ICICI Direct's research report on Wonderla Holidays
Wonderla reported a weak set of numbers for the quarter, missing its estimates on all parameters but one. While revenues grew 10.3% YoY to Rs 60.4 crore, it was contributed by a mix of 6.9% footfall growth (5.9 lakh vs. I-direct estimate of 7 lakh) and 3.4% growth in revenues per visitor (Rs 1,035 vs. I-direct estimate of Rs 922). Bangalore Park witnessed double digit growth in footfall while revenues per visitor dropped 2.7% YoY. EBITDA was at Rs 17.8 crore growing 16.3% YoY (below I-direct estimate of Rs 22.9 crore). Other expenses remained elevated at Rs 26.7 crore, growing 14.5% YoY higher than our estimates, thus dragging EBITDA. EBITDA margins expanded 152 bps YoY in Q4FY19 to 29.4% (vs. I-direct estimate of 35.7%). The company ended FY19 with 40.5% margins. Owing to a low base of Q4FY18 and tax provisions being at a lower rate YoY, PAT exhibited 88% growth YoY to Rs 6.9 crore. Further, the Board has recommended a final dividend of Rs 1.8 per share to be approved in the AGM.
Wonderla has assets of Bangalore Park, which is a cash cow and Hyderabad Park that is poised for growth. Additionally, the debt free status of the company is an added advantage considering the asset heavy model of the company’ business. Further introduction of new rides would also keep the momentum going, attracting higher visits. Hence, we arrive at a target price of Rs 380 based on DCF analysis implying valuation of 29x FY21E P/E.
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