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Kotak Securities
Wonderla
Holidays (Buy)
CMP: ₹400.4
Target: ₹465
Wonderla Holidays Ltd (WHL) is the largest amusement park chain in India with over 17 years of successful operations.
WHL has been running amusement park in southern India through 3 operational parks in Kochi, Bangalore and Hyderabad. The company follows low capex model with its parks located near large cities with less than seven years of pay-back period as against capex intensive holiday destination model. In order to tap huge opportunity in the sector, WHL is expanding its presence to Chennai where it has finalised land and is further targeting new geographies particularly in western India. WHL intends to set up new park every three years which would be funded through its strong balance sheet and robust cash flows with negligible debt. The contribution from high margin non-ticket revenue has been increasing over the past 5-6 years to 25 per cent in FY17 from 14 per cent in FY12 and is expected to increase further to 28 per cent in FY19E.
We expect company’s revenue and PAT to grow at a CAGR of 18 per cent and 46 per cent respectively in FY17-19E (due to lower base of FY17). We recommend ‘Buy’ on the stock with discounted cash flow (DCF) based target price of ₹465.
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