More than child’s play: This amusement park company turns multibagger

• Wonderla Holidays turned a multibagger in the last one year, with around 150% returns.
• The company has amusement parks in Bengaluru, Kochi and Hyderabad.
• Analysts say that it is entering a growth phase with two new parks planned at Chennai and Odisha.

As schools re-opened last year, it kickstarted a ‘kid economy’ that includes school bags, water bottles and more. Then there are the school picnics that also re-started at the fag end of the last academic year — bringing good news for listed company Wonderla Holidays.

Apart from droves of school kids, the amusement park and resort company also gained from corporate events, general crowd and more as India went on a revenge-travel mode — pushing its footfalls to a record high of 33 lakh in FY23. That’s 39% higher than the pre-pandemic level.

Unsurprisingly, the stock turned a multibagger in the last one year, with around 150% returns, as per data on BSE.

A year of consolidation & beyond

Arun K Chittilappilly, managing director of Wonderla Holidays told CNBC in June that after a stellar growth in FY23, he expects footfalls to grow moderately by 5-10% in FY24 — making it a year of consolidation. The company expects its ARPU, or average revenue per user, to grow at the same level as FY23 — at 10-12%.

Market analysts, however, see a good run for the stock in the coming years for two reasons — its investments into new parks in Chennai and Odisha. It already has three parks — one each in Kochi, Hyderabad and Bengaluru.

“The company is also entering a new phase of growth with its Chennai and Odisha parks set to become operational in FY26. While the company has started capex on the Odisha park, it will also start capex on its Chennai Park as it has received the Local Body Tax waiver for 10 years for the park (excluding construction period of 2 years),” said a report by ICICI Securities.

With an estimated operating cash flow of ₹360 crore over FY24-25, ICICI Securities believes that the company can comfortably fund incremental capex of ₹400 crore over the next two years on these new parks.

Unlike most of its peers, the company, which suffered heavily from lockdowns and the pandemic lull, wasn’t hit as much financially. “Wonderla Holidays managed its cash flows very efficiently during the lull in the pandemic times without stressing the balance sheet by raising funds through debt. The company generated strong operating cash flows with low working capital requirement,” said a report by Sharekhan.

Calling these two new parks as ‘incremental triggers’, ICICI Securities believes that Chennai can potentially generate revenue similar to Bengaluru while Odisha may generate 60% of Hyderabad/Kochi park revenue.

Down with the events

The company is also ramping up operations with extensive marketing and events like food festivals, events around Fathers’ day etc. It is targeting to launch at least two such events every month.

“Marquee musical concerts, festivities and occasions continue to draw crowds with people gathering at large, with Wonderla as their preferred destination for events and making memories for lifetime. Such events are gaining over 3,000-5,000 footfalls per event per park and help in attracting walk-in crowds,” says Sharekhan.

It’s also sprucing up its resort business that will bring in more weekend crowds and aid resort occupancies. It’s planning to add four new attractions — Caribbean Whirl, Mai Kinda Place, Bar by the Pool and Lawn at its Bengaluru Resort in July.

The addition of the new wonders will help enhance the experience of its customers and help in improving resort occupancies during weekends and add incremental footfalls at parks – in addition to bringing in ticketing and non-ticketing revenue.

Resort occupancy stood at 69% in FY23, which is much higher than the pre-pandemic level of 58% in FY20.

Aided by a strong balance sheet, the company is set to chart robust growth in the years ahead, analysts believe, which leaves some juice yet to be squeezed out of this multibagger. ICICI Securities has set a target price of ₹738 for Wonderla’s shares, while Sharekhan has it at ₹710 — even as the stock is currently trading at around ₹520.