Wonderla Holidays
BSE SENSEX
22,952
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
S&P CNX
6,976
WONH IN
56.5
20.7 / 0.3
430/242
-6/41/36
40
29.0
11 February 2016
Q3FY16 Results Update | Sector: Others
CMP: INR337
TP: INR400 (+19%)
Buy
Results below expectations; Hyderabad Park on track for 1QFY17
Financials & Valuations (INR b)
Y/E Mar
2016E 2017E 2018E
Sales
2.0
3.1
3.9
EBITDA
0.8
1.2
1.6
NP
0.6
0.7
0.9
EPS (INR)
9.9
13.0
16.5
Gr. (%)
10.1
31.9
27.2
BV/Sh. (INR)
70.6
80.7
94.3
RoE (%)
14.7
17.2
18.9
RoCE (%)
21.0
24.4
26.9
P/E (x)
34.2
25.9
20.4
P/BV (x)
4.8
4.2
3.6
Estimate change
TP change
Rating change
5%
Price hikes and adverse weather in south impacts performance:
Wonderla
Holidays saw 3QFY16 revenue grow 6.5% YoY to INR504m (est. of INR578m)
impacted by lower footfalls on account of the unfavorable weather conditions
(rains and colder weather) in November. Footfalls de-grew 12% YoY. Footfalls
in Kochi Park declined 9% while Bangalore Park declined 15% impacted also
due to lesser participation from school and college groups on account price
hikes (20-22% during 1HFY16). Impact of footfalls de-growth on revenues was
offset by higher average revenue per visitor (ARPU) which grew 22% YoY to
INR866. Bangalore ticket ARPU grew 24% while non-ticket ARPU grew 31%,
Kochi saw 13% growth in ticket ARPU and 47% increase in non-ticket ARPU.
Margins miss by higher employee costs and provision for disputed service
tax:
EBITDA de-grew 13% YoY in 3QFY16 to INR182m (est. of INR211m); EBITDA
margins stood at 36.1% (est. of 36.5%) v/s 44.1% YoY. Margins impacted by
250bp increase in employee costs and 890bp increase in other expenses.
Employee costs grew 26% YoY due to top-level hires, employees for Hyderabad
Park (INR10m) and retrospective bonus provision (INR2.5m). Other expenses
increased due to provisions on account of disputed service tax of INR48.5m.
Consequently, PAT de-grew 4% to INR123m.
Hyderabad Park to keep growth momentum intact:
Hyderabad Park is on
track for a launch in March-April 2016. It shall have 43 rides and capacity of 9-
10k people in a day. Recruitment for the park has already begun and people
are undergoing training. Management highlighted that footfalls have seen
rebound beginning January 2016 for Bangalore and Kochi Parks so they expect
growth momentum to continue.
Valuation and view:
We expect WONH’s revenue to clock 29% CAGR and 23%
PAT CAGR over FY15-18. We cut our FY16E/FY17E/FY18E EPS by 8%/6%/5% to
factor in the subdued growth of 3QFY16 given that 3Q is expected to be
strongest quarter. We believe WONH is on track to be a major beneficiary of
the amusement park industry’s development. The stock trades at 34.2x FY16E,
25.9x FY17E and 20.4x FY18E earnings; we value WONH at 24x FY18E EPS, with
a target price of INR400 (rolled over to FY18). Maintain
Buy.
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +912239825422/Kaustubh
Kale
(Kaustubh.Kale@MotilalOswal.com); +912230102498
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.