Wonderla Holidays: Really a good bet for long term?

First industry which affected in this global pandemic all over the world is leisure and tourism. Adding to pandemic, lockdown burns the cash in the company locker since no revenues was created during this period. But Wonderla holidays which have amusement parks, resorts had a strong defence barrier with the help of its free cash flows.

“Just like other hospitality companies, we were also left without any revenues when the pandemic started. Our main focus was to control cost, because there was no scope to generate revenue. That helped us survive the first and second waves,” said Arun Chittilappilly, managing director of Wonderla Holidays.

In Q4 FY21, Wonderla welcomed 301,000 visitors across all its parks in india, which was 77% less compared to the same year-ago Q4 FY20. Revenue for Q4 FY21 stood at INR34.8 crore, against INR44.9 crore in Q4 FY20. End of the day in Q4 FY21, Wonderla’s cash balance reduced from Rs. 123 crore to Rs. 93 crore.

Kochouseph Chittilappilly in 2000 founded Veegaland in Kochi, the amusement park was later renamed Wonderla in 2008. Two more parks were opened in Bangalore with 3 star leisure resort and in Hyderabad. Kochouseph Chittilappilly before wonderla, he founded V-Guard, which is Kerala-based electrical appliances manufacturer founded by him in 1977.

Really a good bet for long term?

As stated in ICICI Direct and Economic times, "Wonderla had a price-to-equity ratio (P/E) of 30 in FY18, which dropped to 18 in FY20, and is estimated at 15.7 based on forward earnings for FY23. A bulk of Wonderla’s revenues continues to come from sale of tickets. In FY20, ticket sales contributed 71.7% to total revenues while the rest came from non-ticket items such as in-park restaurants, merchandise, resorts, and so on. However, this mix has changed since FY15, the year in which ticket sales contributed 79.5% of total sales, the highest ever".

Stock gave 1 month return of 22.99% and 1 Year of 86.58% along with the combination of ICICI recommendation of low PE in upcoming years with the help of project pipeline, we can conclude this stock is a good bet to buy for long term. But for short term, this stock need some healthy corrections so that we can buy the shares in less price.