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  • Stock Recommendation: Wonderla Holidays Ltd - BUY - TP Rs.406

    Publish date: 9th August, 2018

    Result Update

    WHL reported strong Q1FY19 results driven by robust operating margins, but footfall growth was lower than our estimates.

    Key Highlights

    • Net revenue for the quarter was at Rs 1.04 bn which grew by 1.5% YoY on account of 6.3% yoy growth (Vs estimates of 7.6% growth) in total footfalls while average revenue per footfall declined by 4.2% yoy. On like to like basis, revenues grew by 10% yoy adjusted for differential taxes. 
    • EBITDA for the quarter grew by 31.6% yoy to Rs 575 mn and EBITDA margin improved by 1260 bps yoy to 55.3% and was ahead of our estimates on improved operational efficiency and lower other expenses.
    • The management is positive on future growth prospects considering stable pricing environment, post GST rate for amusement park reduced from 28% to 18% and various initiative adopted by it, though there are short term challenges in terms of footfall growth in Kochi. The company has guided for 7-8% growth in footfalls in FY19E with 300-400 bps improvement in EBITDA margins.

    Valuation & outlook

    • We are positive on future potential of theme parks in India and maintain our positive view on the company for running the business efficiently despite challenges. We have marginally cut our estimates factoring in lower growth in footfalls in Q1FY19.
    • The stock is trading at PE of 36.0x and 26.9x based on FY19E and FY20E revised EPS of Rs 9.3 and Rs 12.5 per share, respectively. We maintain Buy rating with revised DCF based target price of Rs 406 (Vs Rs 417 earlier).


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