Buy Wonderla Holidays; target of Rs 799: Geojit Financial Services

Geojit Financial Services is bullish on Wonderla Holidays has recommended buy rating on the stock with a target price of Rs 799 in its research report dated March 24, 2025.

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March 24, 2025 / 13:55 IST

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Geojit Financial Services research report on Wonderla Holidays

Wonderla Holidays Ltd. (WHL) is a leading chain of amusement parks in India, operating four major parks in Kochi, Bengaluru, Hyderabad, and Bhubaneswar. The company offers a wide range of land and water rides and provides food and beverages through its restaurants and food courts inside the park. The new park additions in Bhubaneswar and the upcoming Chennai park are expected to significantly increase overall footfall. We project revenue growth of 16% in FY26 and 23% in FY27, supported by increased footfall and Average Revenue Per User (ARPU) growth. ARPU has shown an 11% CAGR from FY13 to FY24, and we expect it to grow in a similar pace to ~Rs.1580 by FY27. We believe the upcoming Chennai park will achieve ARPU levels similar to established centres like Bangalore and Kochi, supporting this growth. New park openings typically result in initial margin dilution due to higher setup and operational costs, such as employee expenses. However, as footfall ramps up, margins are expected to increase, making this dilution short-term. Active expansion plans, including the upcoming Chennai park, and discussions with the government for expansion North India through an asset-light model, pave the way for a bright future. The company's debt-free status enables efficient resource allocation for growth, ensures financial stability, and facilitates effective management of cash flow fluctuations.

Outlook

We assign a valuation of 18.5x FY27E EV/EBITDA, reflecting the long-term average and initiate coverage with an BUY rating, setting a target price of Rs.799.

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