Hold Wonderla Holidays; target of Rs 285: ICICI Direct
ICICI Direct’s research report on Wonderla Holidays
On the back of healthy footfalls growth, Wonderla reported a positive set of Q1FY20 numbers. Revenues for the quarter increased 13.2% YoY to Rs 117.6 crore (vs. I-direct estimates of Rs 118.3 crore). The company witnessed ~9 lakh footfalls during the quarter, 8.2% YoY growth while revenues per visitor increased 4.6% YoY to Rs 1308. Kochi Park witnessed strongest growth of 12% while the Hyderabad Park disappointed with 4% growth in footfalls. EBITDA margins improved 300 bps YoY to 58.3% leading to EBITDA growth of 19.3% YoY to Rs 68.6 crore (above I-direct estimate of Rs 64 crore). Led by lower tax expenses, the company reported 27.5% growth in PAT to Rs 42 crore (above I-direct estimate of Rs 37.1 crore). The company intends to go ahead with the construction of the Chennai Park despite ongoing challenges with respect to local body tax issues.
While the company’s balance sheet stands strong with no debt and healthy cash flows, which can help the company fund capex from internal accruals, we believe a delayed recovery in footfalls of Kochi Park due to floods this year as well, would keep the stock under pressure. Thus, we downgrade Wonderla Holidays to HOLD with a target price of Rs 285/share.
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