Wonderla Holidays - Better days lie ahead - ICICI Securities

Wonderla Holidays (Wonderla) saw Q4FY21 footfalls bouncing back to 77% of Q4FY20 levels with the company's amusement parks remaining partially operational in Jan-Feb'21 and fully operational in Mar'21. While the second Covid wave in India has led to the company's parks remaining closed from Apr'21 again, the sharp recovery in Q4FY21 augurs well for the company's operations to return to pre-Covid levels sometime in FY23E. With a net cash balance of Rs0.9bn as of Mar'21 and no capex in FY22E, we believe that the company should be able to tide over the transient Covid induced loss in FY22E revenue. We model for footfalls across parks to recover to 50% of FY20 levels in FY22E and 75% in FY23E and EBITDA of Rs0.4bn in FY22E and Rs0.8bn in FY23E vs. FY20 EBITDA of Rs1.0bn. We resume coverage on Wonderla with an ADD rating and target price of Rs236/share valuing the company at 15x FY23 EV/EBITDA. Key risks to our rating are extended park closures in FY22E and slow recovery in footfalls and pricing.

- Recovery in Q4FY21 footfalls an encouraging sign: Wonderla clocked total footfalls of 0.31mn in Q4FY21 across its three operational amusement parks in Bengaluru, Kochi and Hyderabad which is 77% of total Q4FY20m footfalls of 0.41mn. Among the amusement parks, Bengaluru and Hyderabad both clocked 85% of Q4FY20 footfalls with Kochi clocking 65% of last year's levels. During the quarter, in Jan'21, parks were functional only from Thursday to Sunday and in Feb'21, from Wednesday to Sunday and all the Parks were opened on all the days in the month of Mar'21. While the second Covid wave in India has led to all the company's parks remaining closed from the beginning of Apr'21, the sharp recovery in footfalls seen in Q4FY21 augurs well for a marked improvement in company's performance from Q3FY22 onwards assuming the parks reopen by then. Q4FY21 revenue of Rs333mn declined 21% YoY with share of non-ticket revenue (Food & Beverage) at 25% with reported EBITDA of Rs254mn (EBITDA margin of 7.6%).

- Chennai project on hold, company continues to explore options in other States: As per company management, the construction work on the Chennai amusement park is still at an initial stage and has been put on hold till the end of FY22 until clarity emerges on Local Body Tax issues with the State Government and business recovery in H2FY22. The company continues to explore options for new parks in the Indian states of Odisha and Gujarat and in Colombo, Sri Lanka.

- Liquidity position remains comfortable with a debt free balance sheet: While it is difficult to estimate the exact time when the company's amusement parks return to pre-Covid footfalls and revenues, with the company having a debt free balance sheet and cash and liquid investments of Rs930mn as of Mar'21, we believe that the company is well cushioned to tide over a prolonged recovery period in FY22E.

Shares of Wonderla Holidays Ltd was last trading in BSE at Rs.208.85 as compared to the previous close of Rs. 207.05. The total number of shares traded during the day was 5784 in over 316 trades.

The stock hit an intraday high of Rs. 214 and intraday low of 207.55. The net turnover during the day was Rs. 1214355.

Source : Equity Bulls

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