Buy Wonderla Holidays; target of Rs 415: ICICI Direct
ICICI Direct is bullish on Wonderla Holidays recommended buy rating on the stock with a target price of Rs 415 in its research report dated May 29, 2018.
ICICI Direct's research report on Wonderla Holidays
Wonderla Holidays’ results were below our estimates. Revenues declined 7.5% YoY to Rs 54.9 crore (vs. I-direct estimate: Rs 66.5 crore) mainly led by 12.1% YoY decline in footfall Bengaluru park revenues fell 11.2% YoY to Rs 22.4 crore while revenues from the Kochi park declined 14.7% YoY to Rs 15.7 crore mainly led by a decline in footfall. However, Hyderabad park revenues remained flat YoY at Rs 15.3 crore EBITDA increased 79.2% YoY to Rs 15.3 crore (vs. I-direct estimate of Rs 20.7 crore) mainly led by operating leverage benefit. On the margin front, the EBITDA margin increased from 14.4% to 27.8% (vs. I-direct estimate of 31.1%).
Outlook
Introduction of new rides and a new park at Hyderabad will continue to keep footfall growth healthy in coming years. This, coupled with lower GST rates (from 28% to 18%) will not only boost footfall growth but also act a lever to boost margins (led by operating leverage benefit). Also, the company’s focus on increasing non-ticket revenues is expected to drive margins. In addition, a healthy balance sheet (debt free in FY18) and revenue & EBITDA CAGR of 13.5% and 19.1%, respectively, in FY18-20E demand premium valuations. Hence, we have positive view on the stock. We arrive at a DCF based target price of Rs 415.
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