Wonderla Holidays Ltd

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About the Company

Wonderla Holidays Limited operates amusement parks and resorts in India. It operates through Amusement Parks and resorts, and Other segments. The company’s amusement parks offer land, water, high thrill, and kid rides. It operates three amusement parks in Kochi, Bengaluru, and Hyderabad; and the Wonderla resort in Bengaluru under the brand name Wonderla. The company operates Wonder Kitchen, a food takeaway outlet. It also sells merchandise, cooked food, packed foods, etc. The company was incorporated in 2002 and is based in Bengaluru, India. Collectively the company has >220 acres of land available for future development within our existing parks.

Q4 FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The Company’s footfall grew by 99%(from pre-covid), Revenue rose by 132%(from pre-covid) & EBITDA increased by 734% from the pre-covid level.
2. EBITDA margins rose to 43% in Q4FY23.
3. ARPU is up by 18% to Rs.1184.
4. A sharp uptick in Resort Performance with Revenue up 60% over FY20 registering  Occupancy of 49%.

Investor Conference Call Highlights 

1. The company saw fantastic results In FY23 with doubling up of high footfalls, revenues, EBITDA and PAT.
2. The company has been putting extra efforts for creating more occasions for visiting wonderla where it organized marquee musical events & festivities.
3. Footfalls for the quarter stood as follows: Bangalore park had 12 lakhs footfall having grown by 33%, Cochin park with 11.4 lakhs, grew by 47% and Hyderabad at 9.7 lakhs registered a growth of 37%.
4. The average ARPU for the year was Rs.1240 with a healthy growth in non-ticket revenue driven by strategic initiatives to gain higher wallet share via merchandise and F&B offerings.
5. The board of directors recently accepted the resignation of CFO Mr. Satish Seshadri.
6. The company expects the numbers to trend upwards in the coming year.
7. The company in line with its guidance of increasing APRU by 10-12% did a price hike of 11% recently.
8. The company expects margins to taper down owing to its new capex.
9. The management when asked about updates for Chennai park stated: “government orders says we have a two year construction period and then we have a 10 year tax holidays on the local entertainment tax, so we hope to finish construction within the next two years and then two years from now we hope to open this park to public”.
10. The split for ARPU between Ticket & Non-ticket stood at 75:25.
11. The company sells 5000 tickets per event in a park & these occur twice in a quarter.
12. The pilot project on wearable tech in Bangalore park will take close to 6-12 months for completion.
13. The key driver for Margin expansion in ticket to capex ratio.
14. The management expects the Odisha project to get completed in 2 years & expects to generate 5-6 lakh footfalls during the year one.
15. The company is bullish on Chennai capex since they don’t have to incur any capex on acquiring land, which will lead to higher ARPU to capex ratio. The expected ARPU will be 600-700 & the rides will be developed based on the city since it’s a Tier-2 city.
16. The expected capex for Chennai will range around 150 Crs.
17. The management commented on not participating in the restructuring of Imagica by acquiring it- “we were approached by Imagicaa. We just said we did not want to do Rs.500 Crores, 600 Crores capex that time during COVID and like I said we are doing more asset light kind of models now which is what we were more comfortable doing. Also like I said the Imagicaa was built with a different philosophy in mind they are very hi-fi on capex and so for us we have been getting into our standards would have been even more expensive after buying it we have to invest more so these are some of the reasons why we did not participate in that.”
18. The walk in: group ratio stood at 60:40.
19. The company will towards strengthening its management team by hiring CFO, Technology & HR head.
20. The company is in talks with Govt. of MP, Punjab, Gujarat & Goa under PPP arrangement & expects some announcement soon.
21. The additional capex in its existing projects will be around 10% of revenues i.e. approx 45 Crs.
22. The management when asked about acquiring a company said- “We are not very bullish on acquisition because you know an existing operator will obviously want that valuation for his assets and then buying it and then modifying into our standards again more capex so I think the main differentiating factor for a Wonderla park is our high efficiency in our capex so when we acquire another company and then modify it, our efficiency will vanish so we are not very unless there is a specific opportunity we are not that open to acquisition, we are more happy to do maybe management contracts and things like that so that we are exploring but that also is hard because this is a very tailor-made offering it is not something that we can, it is not like a hotel where I can buy and rebrand it as a Wonderla hotel, building a park usually we have to do it from scratch so it is harder to do it, I am not saying it is impossible but it is harder to do it”.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator and has diversified businesses: Resorts, Theme Parks, Water Parks and Restaurants. This business has strong entry barriers because of the high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. The company reported stellar revenue growth coupled with extraordinary margin expansion. It is focusing on the digital front and marketing by targeting relevant audiences and also trying to better optimize things by using data analytics. The company has got greenlight for Chennai project & will be able to launch the Odisha & Chennai park in the coming 2 years. With a brand recall value, management seems to be confident to pass on inflation. With all the factors in consideration, Wonderla is going to get benefit from travel and tourism. It remains to be seen how the company will tackle the reduction in revenge spending which will have a direct impact on the demand coupled with higher base & extraordinary margins in FY23 which are expected to taper down in FY24 owing to higher capex in the other projects.

However, given the resilience of the balance sheet & strong operational efficiencies lead by a quality management team, it remains a very interesting stock to keep track off.

Q3 FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The Company’s footfall grew by 28%(from pre-covid), Revenue rose by 62%(from pre-covid) & EBITDA increased by 121% from the pre-covid level.
2. EBITDA margins rose from 38% in Q3FY20 to 52% in Q3FY23.
3. The footfall breakup in Q3FY22 was: Bengaluru- 42%, Hyderabad – 23%, Kochi – 19%
4. ARPU is up by 27%.
5. A sharp uptick in Resort Performance with Revenue up 71% over FY20 registering the Highest Occupancy of 72%.

Investor Conference Call Highlights 

1. The company continues to gain wallet share and grow non-ticket revenue, exciting initiatives have helped it to improve merchandise sales in SPH to 23% growth per head.
2. The company is envisaging a capex of INR 350 crore to INR 400 crore for projects in Chennai and project in Bhubaneswar. In The Chennai project, it is still waiting for a waiver on the tax.
3. The Odisha project is slated to get completed by 2025.
4. The company expects to grow by 15-20% in the coming year with footfalls growing by 6-8%.
5. The management believes current margins are extraordinary & normalized margins will range between 40-42%.
6. Online booking contribution stood at 15-20%.
7. Walk-in: Group split stood at 44:56.
8. The current investments in Bhubaneshwar & Chennai stand at 30 & 10 Crs respectively.
9. The company has incurred a capital investment of 1Cr on making wearables which will help with the seamless digital journey, payment gateway for F&B, retail inside the park, And some type of queue management.
10. The management expects to do a price hike of 8-12% in the coming year.
11. The company’s current strategies include digital marketing over traditional marketing, 2 activities per park per month for both the walk-ins and groups,  strengthening the institutional sales side & working with tour operators.
12. In terms of capacity, Chennai will be similar to Bangalore and Bhubaneswar will be about half of it. 
13. The average footfalls for Kochi capacity for the quarter stood at 3.16 lakhs & ARPU stood at 1,100.
14. The management explains that Q1 is the best quarter while Q2 is the worst.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator and has diversified businesses: Resorts, Theme Parks, Water Parks and Restaurants. This business has strong entry barriers because of the high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. The company reported stellar revenue growth coupled with extraordinary margin expansion. It is focusing on the digital front and marketing by targeting relevant audiences and also trying to better optimize things by using data analytics. With a brand recall value, management seems to be confident to pass on inflation. With all the factors in consideration, Wonderla is going to get benefit from travel and tourism. However, Wonderla has the resilience of the balance sheet and has survived through the tough times and now it seems things are more in the favor of Wonderla.

Q2 FY23 Updates

Financial Results & Highlights

Detailed Results

1.  The Company’s footfall grew by 32%, Revenue rose by 62% & EBIDTA increased by 169% from the pre-covid level.
2. EBIDTA margins rose from 13% in Q2FY20 to 33% in Q2FY23.
3. The footfall breakup in Q2FY22 was: Bengaluru- 35% , Hyderabad – 18%, Kochi – 38%
4. ARPU is up by 22%, including a 20% increase in SPH.

Investors Conference Call Highlights

1. The company’s innovative marketing campaigns like during Ganesh Chaturthi, Onam, Daughters Day, Grandparents Day, Independence Day, etc led to a significant rise in footfall & an improvement of 1,800 basis points from 58% in the corresponding COVID quarter of FY 20 to 76% in Q2 FY ’23.
2. The Kochi Park hosted the first-ever sunburn festival in the city, an electronic music festival headlined by globally famous DJ Nucleya
3. The management expects fixed costs like employee salaries etc, which were cut down by Rs.3.5 Crs per month will be brought back coupled with inflation leading to higher costs in the coming months.
4. The company is positive of the government of Tamil Nadu helping it waive that LBT issue.
5. The company is working on a technical project upgradation in Bangalore which is a pilot project & will cost Rs.5 Cr. This will help the company understand customer patterns, ride usage, etc. The company is looking to implement this by Q2FY24.
6. The company’s CAPEX requirement for Chennai is INR 330 crores, of which the company has already invested close to INR 115 crore & will incur more once tax exemption dispute with the govt. Is settled.
7. The company’s Capex requirement in Odisha is Odisha is about INR 120 crores, and it has already invested about INR 7-8 crores.
8. The management is bullish on Hyderabad whose contribution to total revenues has already increased from 20% to 27% post covid.
9. The company will take not more than 24 months to complete the Chennai project once the approval is received.
10. In a bid to improve non-ticket revenues, the company is revamping its restaurants & resorts & add new rooms in the same to meet increased demand.
11. The company’s focus post the next 3 years after adding two new parks will be to ensure the number of footfalls would have at least gone up by a factor of 1.5x-1.6x,  ARPU to compound by 7% per year & a 5-7% price hike every year.
12. The mix between groups & walk-ins has shifted from 42:58 in the pre-covid period to 23:77 post covid. The management expects group contribution to be increasing in Q3.
13. The management explains that retail footfall is priced for a full ticket while groups get 20-30% discounts if they have more than 20 people.
14. The  Walk-in vs group percentage in H1 – Hyderabad was 86-14; Kochi was 58-42; and Bangalore was 85-15. And overall is 77-23
15. The  Walk-in vs group percentage in Q2 – Hyderabad was 81-19; Kochi was 68-32; Bangalore was 81- 19, and overall was 76-24.
16. Online contributions to total sales has improved from 5% to 20%.
17. The company’s NPS has been more than 90% despite higher volumes.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator and has diversified businesses: Resorts, Theme Parks, Water Parks and Restaurants. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. As we see, the numbers of Q2FY23 is at all-time high in many metrics while footfalls are increasing and the Orissa project ready to be initiated by the Government with excellent support and favorable terms, Wonderla’s management expects to beat FY20 numbers this year. The company is focusing on digital front and marketing by targeting relevant audiences and also trying to better optimize things by using data analytics. With a brand recall value, management seems to be confident to pass on inflation. With all the factors in consideration, Wonderla is going to get the benefit from travel and tourism. However, Wonderla has the resilience of the balance sheet and has survived through the tough times and now it seems the things are more in the favor of Wonderla.

Q1 FY23 Updates

Financial Results & Highlights

(Note- Management has compared Q1FY20 numbers because of lockdown and travel restrictions in between)

Detailed Results

1.     The Company registered Revenue Growth of 26% with a Revenue of Rs152.3 crores in Q1FY23, as compared to Rs 121.3 crore in Q1FY20.
2.     EBITDA in Q1FY23 increased by 30% YOY from Rs 72.28 crore in Q1FY20 to Rs 94.2 crore in Q1FY23 on account of cost efficiency initiatives and overwhelming footfalls in all the parks
3.     PBT margin stood at 56% in Q1FY23.
4.     Ticket revenue grew by 26% and non-ticket revenue grew by 31% in Q1FY23 compared to Q1 FY 20
5.     Cash- Rs 200 crores.
6.     ARPU INR 1,300 and Footfall 1.1 Million+ 24% Growth

Investors Conference Call Highlights

1. Highest ever quarterly footfalls, revenue, EBIDTA and PAT since inception two decades ago.
2. Management seems to be confident to surpass pre-covid business levels in full FY23.
3. Robust growth across the park; footfall surpasses pre-pandemic levels.
4. Overall Footfall Grew by 24% compared to Q1 FY 20.
5. Wonderla launched a new ride Mystic Saucer in our Kochi park, offering more excitement and thrills to customers.
6. The Company is leveraging its digital media marketing and scaling its customer connect.
7. The Company is implementing innovative marketing activities and launching attractive offers separately to encourage walk-in and group footfalls.
8. At Bangalore, Highest ever Occupancy @ 80% 6,047 rooms vs 4,611 rooms (FY20).
9. The company has signed an agreement with the Odisha government for the development of an amusement park project in Bhubaneshwar. Wonderla is planning to invest Rs 125 crore funded mainly by internal accruals and with some level of debt if needed. Wonderla would be adopting an asset light approach by leasing a large parcel of land.
10. Management expects 3-4 million footfalls by FY25.
11. Management is going for judicious pricing, slowly improving pricing and would now take care of inflation part of it.
12. As per management, there is no problem in increasing prices as there is no similar offering and that wouldn’t affect footfall as well.
13. Q2 and Q4 would be slightly moderated while Q1 and Q3 would see a good set of numbers.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator and has diversified businesses: Resorts, Theme Parks, Water Parks and Restaurants. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. As we see, the numbers of Q1FY23 is at all-time high in many metrics while footfalls are increasing and the Orissa project ready to be initiated by the Government with excellent support and favorable terms, Wonderla’s management expects to beat FY20 numbers this year. The company is focusing on digital front and marketing by targeting relevant audiences and also trying to better optimize things by using data analytics. With a brand recall value, management seems to be confident to pass on inflation. With all the factors in consideration, Wonderla is going to get the benefit from travel and tourism. However, Wonderla has the resilience of the balance sheet and has survived through the tough times and now it seems the things are more in the favor of Wonderla.

Q4 FY22 Updates

Financial Results & Highlights

Detailed Results

1. The company revenues were up to Rs 59 Cr for the 1st time since the start of COVID-19. The company was PAT positive for the 2nd time since the pandemic started with PAT of Rs 8 Cr.
2. Hyderabad & Bangalore parks were operational throughout Q3 while Kochi park was operational for 80 days in the quarter.
3. Total footfall in Q4 was at 4.94 lacs while in FY22 footfall was at 10.57 Lacs.
4. March month recorded highest ever footfall since inception at 3.02 lacs.
5. FY22 Revenue metrics:- ARPU – 1146, ATP – 849, SPH – 297
6. Various marketing strategies like “women only world” and “girl power rocks” were received positively by the target audience. 

Investors Conference Call Highlights

1. Many different unique events were done last quarter to increase footfalls in innovative ways.
2. Women’s day was a record breaking highlight day, with highest footfall ever in the 22 years history of the company at 32,000 visitors in a single day.
3. All three parks reported their highest ever footfalls in the month of March since their opening.
4. If the company keeps on adding new rides in its parks, it also removes the old rides. The new rides added by the company are much different than the ones added back in 2002 or 2003 thus resulting in a different experience.
5. Currently the management believes that the company has enough rides, so there is no plan right now to add rides.
6. The Chennai Park capex is currently on hold. The company has invested 100 crore INR in it till now in the land. The company plans to do INR 350 to 400 crore more capex which is pending due to an outstanding issue with taxation there.
7. The Odissa park is a smaller project with less than 100 crore. The company plans to get it off the ground in this financial year itself.
8. The company plans to have a light version of its park in Bhubaneshwar as it a less than 100 crore investment. The company also plans to have a lower-than-average ticket pricing there.
9. The problem the company is facing in Tamil Nadu is that there is an extra 10% tax on every ticket that is sold in every amusement park or movie theatre. This is apart from the current 18% GST.
10. The capex planed by the company will be funded through internal accruals and some debt. Although this year the company is not planning to take any debt.
11. The construction period for the Odissa park is two years with a CAPEX plan of INR 120 crore.
12. Currently about 30% bookings happen online, which was only 10% pre-COVID.
13. The company is keen on doing a project in Goa if Chennai project gets delayed. The company has also been invited by the Government of Goa.
14. In the current size, each park of the company can handle only 1.2 million to 1.5 million visitors a year.
15. The company has goal of reaching 60:40 ticket to non-ticket revenue. Currently it is 75:25 for the company.
16. The management states that for a much larger accommodation of 3 million visitors a year, the parks will have to be much bigger, and people will have to be willing to pay for that kind of a ticket.
17. In the past FY, the company has already increased prices three times and plans to increase prices one more time on June 1.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. Q4 saw great footfalls for the company with over Rs 50 Cr in revenues and turning PAT positive for the 2nd time since COVID-19. The management remains confident of the company’s brand value and states that the company can improve its EBITDA margins even further from the current level of 29% when footfalls rise. The company is also looking at revenue-sharing opportunities with other parks and is not keen on buying them out fully. It is also keen on looking at opportunities in Goa now that the Chennai plans have been put on hold. It remains to be seen how much time it will take for normalcy to come back in their business, how will the company be able to capitalize on its current momentum, and how will it be able to weather through the incoming future waves of COVID. However, Wonderla has the resilience of the balance sheet to survive through these tough times and the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q3 FY22 Updates

Financial Results & Highlights

Detailed Results

1. The company revenues were up to Rs 50 Cr for the 1^st time since the start of COVID-19. The company was PAT positive for the 1^st time since the pandemic started with PAT of Rs 4.55 Cr.
2. Hyderabad & Bangalore parks were operational throughout Q3 while Kochi park was operational for 80 days in the quarter.
3. Total footfall in Q3 was at 3.8 lacs while in 9M footfall was at 5.63 Lacs.
4. The resort was at 58% occupancy with ARR of Rs 4260.
5. PARK PLUS strategy has helped Wonderla record higher footfalls of more than 1k per day during the event.

Investors Conference Call Highlights

1. The Bengaluru Park was closed for two weekends in January and then reopened around January 22, 2022, whereas the Cochin Park was shut for about two Sundays in January 2022 due to Omnicron.
2. The management stated that the company will continue to host theme events on festivals and holidays in Holi at least in Q4 after the great response to the Dussehra & New year events.
3. The average ticket price in Q3 was at Rs 886 while retail and F&B sales were at Rs 303. Thus the total ARPU came to Rs 1189 vs Rs 934 in FY20.
4. The company recorded 1,76,000 footfall for Bengaluru, 91,000 for Kochi, and 1,13,000 for Hyderabad park, 3,81,000 is a footfall for the quarter.
5. The company did a 29% EBITDA margin in Q3 with the management stating that it can improve with a rise in footfall.
6. The ticket to non-ticket spend was at 75:25.
7. The management has stated that the company will not be taking part in the Imagica auction directly and may consider partnering up for operations.
8. The management states that the company will continue to maintain most of its marketing focus towards digital media.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. Q3 saw great revival for the company with over rs 50 Cr in revenues and turning PAT positive for the 1st time since COVID-19. The management remains confident of the company’s brand value and states that the company can improve its EBITDA margins even further from the current level of 29% when footfalls rise. The company is also looking at revenue-sharing opportunities with other parks and is not keen on buying them out fully. The management has also stated explicitly that Wonderla will not be participating in the auction for Imagica but remain open to partnership for running the park. It remains to be seen how much time it will take for normalcy to come back in their business, how will the company be able to capitalize on its current momentum, and how will it be able to weather through the incoming future waves of COVID. However, Wonderla has the resilience of the balance sheet to survive through these tough times and the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q2 FY22 Updates

Financial Results & Highlights

Detailed Results

1. The company revenues were flat to pre-covid levels in Q2 with the parks staying operational only for 1½ months because of the 2^nd wave of COVID-19.
2. Total footfall in Q2 was at 1,47,526. Bangalore Park achieved 79,781, Kochi Park achieved 17,595 and Hyderabad Park achieved 50,150 of footfall.
3. The Hyderabad Park opened back in 5^th Aug and the Bangalore Park opened up in 12^th The resort in Bangalore opened on 5^th July.
4. In the first three days of reopening, the company offered free entry to COVID angels at all parks. This initiative was well received and admired by the people. COVID angels registered a footfall of 2612 at Hyderabad park, 4481 at Bangalore park and 3343 at Kochi park.
5. The company saw an EBITDA loss of Rs 3.5 Cr.

Investors Conference Call Highlights

1. Due to the second wave of Covid, all of the parks were closed from 19th April to 4th August, after which they were opened in a phased manner with the Hyderabad Park being opened first. Kochi Park was opened last, therefore, having negligible revenues.
2. The company achieved 100% vaccination this quarter for the entire staff including both on-roll and off-roll employees.
3. The management is very confident of the demand recovering as people increase revenge spending.
4. The management says that they are on track to reach normalcy with many other industries at pre-covid operating levels.
5. The management expects good demand in the third quarter with covid unlocking and festivities in Q3.
6. Except Kochi, the other parks are operating at full capacity with necessary permissions currently.
7. The parks saw better footfalls during recent festive events compared to YoY.
8. The average ticket prices are similar to pre-covid levels with prices in Bangalore the highest.
9. Currently almost 50% of tickets are booked online vs 10% pre-covid which helps to improve average ticket prices.
10. The management says that it is comfortable to increase ticket prices this year even though its competitors are cheaper because of being preferred the choice of customers.
11. The management says that yearly the ticket prices are increased a bit below the inflation level at 5%-7%.
12. The management expects by the end of this FY to reach pre-covid levels of operation or even better.
13. The management is not open to buying out any parks currently being offered but is willing to do a revenue-sharing operating model.
14. No new project to be started in this financial year despite offerings coming from various governments.
15. The management says that the Odisha government has been very proactive with offerings of free land, water, electricity for a park in Bhubaneshwar.
16. About 30%-40% of the footfalls were groups pre-covid, whereas it is 10% currently.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. Q2 saw park shutdowns due to the 2nd wave of COVID where the company managed only 1½ months of park operations. The management remains confident of the company’s brand value and states that it can even do a price increase without any drop in demand. The company is also looking at revenue-sharing opportunities with other parks and is not keen on buying them out fully. The company has also seen good reception and perks offered by the Odisha Govt for setting up the new park in the state. It remains to be seen how much time it will take for normalcy to come back in their business, what moves will the company make to use its cash chest and expand inorganically, and how will it be able to weather through the incoming future waves of COVID. However, Wonderla has the resilience of the balance sheet to survive through these tough times and the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q1 FY22 Updates

Financial Results & Highlights

Detailed Results

1. The company revenues were down a lot in Q1 due to the parks staying operational only for 18 days because of the 2^nd wave of COVID-19.
2. Total footfall in Q1 was at 34,485 only. Bangalore Park achieved 11,171, Kochi Park achieved 12,012 and Hyderabad Park achieved 11,302 of footfall.
3. The Hyderabad Park opened back in 5^th Aug and the Bangalore Park opened up in 12^th The resort in Bangalore opened on 5^th July.
4. The company launched a special 50% discount offer for booking tickets through the online platform from 25th May to 13th June. The Park tickets were sold at Rs 699 and resort rooms were sold at Rs 2999. Both tickets are valid till 31^st March 2022. Total tickets sold were at 11,953 with
   Bangalore at 6,493; Kochi at 2,913 and Hyderabad at 2,547.
5. The company saw an EBITDA loss of Rs 9.05 Cr.

Investors conference call Highlights

1. Over 60% of the company’s employees are vaccinated and the rest will be done within Q2.
2. The amusement park industry has made a good comeback globally with leading parks in USA, EU, and Asia staying open and seeing good footfalls.
3. The company maintained average monthly expenses at Rs 3.5 Cr in Q1.
4. Both the Bangalore and Hyderabad parks are now operating at 50% capacity.
5. The company has seen no issues arising in ride equipment from park closure as they have maintained a regular maintenance schedule even during the shutdown.
6. The company doesn’t have any plans to monetize the excess land it owns currently but it is looking to keep the excess land for future expansion and adding other forms of outdoor entertainment.
7. The monthly expenses of near Rs 3.5 Cr is already the low bound on expenses according to the management as normal monthly expenses were near Rs 9-10 Cr in Jan, Feb, and March 2021 when the parks were open for 4-5 days a week.
8. The management has seen a good response to the online campaigns and is optimistic about the online sales platform.
9. The company will not be working on the Chennai park in FY22 and will start work on it from next year onwards.
10. The management states that the company has many offers in mind, and it will keep doing different offers till normalcy comes back.
11. The company is still evaluating a possible acquisition of distressed parks and has not yet finalized any candidate.
12. The tax issue with the Tamil Nadu govt is still under discussion and there have not been any new developments on this front yet.
13. The management maintains that it is not averse to using debt and it will go for raising debt if it sees the need for extra capital to make any acquisitions.
14. The company has cash and liquid investments of Rs 7-8 Cr and the management doesn’t expect the company to require any debt to function normally in FY22.
15. The company also has a credit line of Rs 30 Cr which it has not used so far.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. Q1 saw park shutdowns due to the 2nd wave of COVID where the company managed only 18 days of park operations. The company saw a good response in the online ticket booking and advance bookings that it was offering in June which are valid up to March 2022. It has also put the Chennai expansion plans on hold and is focusing solely on bringing back existing park operations to their previous levels now that the Bangalore and Hyderabad parks are open. The company is also looking at possible avenues to acquire distressed parks, but it maintains that it will not be doing any new capex in FY22 so far. It remains to be seen how much time it will take for normalcy to come back in their business especially since it has only been able to get back to operating at 50% in Aug and how will it be able to weather through the incoming future waves of COVID. However, Wonderla has the resilience of the balance sheet to survive through these tough times and the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q4 2021 Updates

Financial Results & Highlights

*Contains exceptional item of Rs 18.9 Cr

Detailed Results

1. The company revenues stayed down at 22% in Q4 but saw a very good QoQ recovery from Q3 sales of Rs 6 Cr.
2. Hyderabad park opened on 9^th
3. Total footfall in Q4 was at 3.11 Lacs vs 4.05 Lacs a year ago. Bangalore Park achieved 1.18 lakhs, Kochi Park achieved 0.82 lakhs and Hyderabad Park achieved 1.11 lakhs of footfall.
4. During the Quarter, In January, parks were functional only from Thursday to Sunday and in February, from Wednesday to Sunday and all the Parks were opened on all the days in the month of March.
5. Wonderla Resort Bangalore saw occupancy of 28% in Q4.
6. Wonderla maintained a debt free balance sheet with liquidity for Rs 93 Cr.

Investor Conference Call Highlights

1. The management expects normal activity to resume once the milestone of 50% vaccination is done. How much time it will take to get there is still unknown.
2. The management is not keen on indoor park entertainment as the entry barriers are low and margins are not good enough to warrant the capex involved.
3. The focus for the company remains to reopen its parks and the Wonder Nursery and Wonder Kitchen initiatives are just there to function in times of park shutdown.
4. Wonderla is not looking at any inorganic acquisitions right now.
5. The management has stated that it is mostly using the downtime for strategizing and trying to improve the businesses when they reopen. This includes digital marketing and customer experience system and revamping of F&B outlets & others.
6. The Chennai project is to be kept on hold till the end of 2021 due to a dispute over tax exemption and labor unavailability issues.
7. All three parks are now closed under state lockdowns.
8. Going forward, Wonderla is looking to complete the opportunities in Chennai and Bhubaneshwar. It is also looking at new opportunities in Gujarat and Sri Lanka.
9. Given that the Gujarat govt is very pro-business, the management is confident of getting the tax exemptions and breaks required to set up there.
10. The Bhubaneshwar park is smaller and should have significantly lower investment compared to the existing parks.
11. The management believes that each of the existing parks is still far away from saturation since they have not even cracked 1 million footfalls yet which again is a small percentage of the total addressable population in those cities. The peak average capacity is around 5000-6000 visitors per day for all three parks.
12. The company is still negotiating with the Govt of Gujarat for the park in the state. The company is looking to target breakeven in 3 years as it has done with the Hyderabad park.
13. 75% of sales were from ticketing income and 25% was from non-ticketing income. It has also seen a higher amount of retail footfalls vs group footfalls (which were mainly from schools and colleges pre-COVID).
14. The company’s focus is to improve non-ticket spending and bring it up to 35% of sales.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. The Quarter saw a decent recovery for Wonderla mainly due to all three parks opening in Jan. But operations in FY22 have again stalled due to park shutdown in the 2nd wave of COVID. In the meantime, the company continues to focus its downtime on strategizing on how to enhance customer experience and to increase non-ticket revenue. It has also put the Chennai expansion plans on hold and is focusing solely on improving existing park operations to their previous levels. Although its parks are shut down currently, the company is looking at other opportunities like in Odisha, Gujarat & Sri Lanka to stay ready to expand once the opportunity arrives. It remains to be seen how much time it will take for normalcy to come back in their business especially since it has gotten shut down again due to the 2nd wave of COVID-19. However, Wonderla has the resilience of the balance sheet to survive through these tough times and the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q3 2021 Updates

Financial Results & Highlights

*Contains exceptional item of Rs 15.56 Cr

Detailed Results

1. The company saw revenues stay down in Q3 as well due operating at 50% capacity from 15^th Oct in Q3.
2. Bangalore park opened on 13^th Nov with parks open only on weekends and holidays.
3. Kochi park was opened on 24^th Hyderabad park opened on 7^th Jan.
4. Bangalore Park achieved footfalls of 36,121 and Kochi Park achieved footfalls of 8,591 during the period. Total footfalls were 44,712.
5. In Wonder Kitchen, the company opened up new branches in Bangalore and Kochi in Q2. Another branch was opened in Hyderabad in Sep. The company now has 4 branches in total.
6. Wonderla Resort Bangalore was reopened for customers from 3^rd October 2020 and saw occupancy of 12% and ARR of Rs 3169.

Investor Conference Call Highlights

1. The management has stated that there were indeed some days when the park had to stop ticket sales as it would go above 50% mandated upper capacity at the Bangalore park.
2. RPV during Dec 2020 for Bangalore park was at Rs 686 vs Rs 786 last year.
3. The management reiterated that it needs 1300 customers per day per park to breakeven.
4. The cash loss during 9M period is Rs 35 Cr. Cash levels as of 31^st Dec 2020 stands at Rs 89 Cr.
5. The management is optimistic of becoming cash breakeven soon. It is slowly progressing to staying open from Wednesday to Sunday from Feb onwards and may decide on March on whether to remain open all days.
6. The parks have seen visitors numbering 4000-5000 at max on weekends while on weekdays the max number is around 1000.
7. The management is confident of operating at 100% capacity once the regulatory cap is lifted but it expects this cap to stay in place for a while till vaccination drives succeed and COVID-19 cases don’t resurface.
8. The situation in Chennai is still the same as last quarter and the negotiations on tax benefits have been put on hold due to local elections there.
9. The company is not planning to expand the use of its open space for weddings as it doesn’t fit well with the target audience.
10. The company had been paying employees 50% of salary when parks were closed. Now they are paying 75% of salary and will slowly come back to 100% as it starts to stay open more days of the week.
11. The company is postponing all new expansions and is focusing on opening up existing parks to the full currently.
12. The management is confident of biding its time and roughing out the tough times better than its competitors due to its robust balance sheet and good operations.
13. Wonder Kitchen is still not profitable and is doing sales of Rs 6-7 Lacs per month in Q3 in Kochi.
14. The management doesn’t expect the Wonder Kitchen vertical to breakeven in Q4 as well.
15. Once all parks are open, the company expects monthly expenses run rate of Rs 9-9.5 Cr.
16. The management is not looking at any means of raising cash as it still has enough cash on books.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. The Quarter was subdued for Wonderla mainly due to the selective opening and the visitor caps imposed on the parks. The business for the first half of the year was fully impacted by nil operating revenue from park operations. In the meantime, the company has focused on cost-cutting measures and getting expanding the open days of the week. It has also put all expansion plans on hold and is focusing solely on improving existing park operations to their previous levels. The company now has 3 parks open in Bangalore, Hyderabad and Kochi and needs 1300 visitors per day per park to breakeven. It remains to be seen how much time it will take for normalcy to come back in their business. However, Wonderla has the resilience of the balance sheet to survive through these tough times and also the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

Q2 2021 Updates

Financial Results & Highlights

Detailed Results

1. The company saw revenues stay down in Q2 as well due to a temporary shutdown of operations which started at 50% capacity from 15^th Oct in Q3.
2. Bangalore park opened on 13^th
3. Approval & SOP from Telangana Government is pending for Hyderabad park.
4. In Wonder Kitchen, the company opened up new branches in Bangalore and Kochi in Q2. Another branch was opened in Hyderabad in Sep. The company now has 4 branches in total.
5. Wonderla Resort Bangalore was reopened for customers from 3^rd October 2020.
6. Cash & cash equivalents for the company has come down to Rs 45 lacs in Sep from Rs 3.7 Cr in March.

Investor Conference Call Highlights

1. George Joseph, the Joint Managing Director, has retired from active management due to the travel and health-related restrictions caused by the pandemic and is now a Non-Executive Director on the Board.
2. Mr Arun Chittilappilly has taken over as the Managing Director.
3. The company is in the process of an enterprise-wide digital transformation which should help increase efficiencies and help the creation of more interactive, dynamic, and immersive attractions, by understanding customer preferences through technologies like data analytics.
4. In Q2, the company had test-launched a new initiative called Wonder Garden, which is a plant nursery-based offering. It offers a range of plants and — indoor and outdoor plants, which the company already has a garden set up in all of its parks for maintenance.
5. The company has reduced its monthly expenses from Rs 10 Cr in March 2020 to Rs 3 Cr in Aug 2020.
6. The company has opened parks in such locations only where it can stay open 365 days without much variance due to weather.
7. The company already has a customer loyalty program with 1.5 lac members but it is a pre-digital system that is going to be digitized.
8. Although merchandising is a big part of sales in the amusement park industry, the company is not actively focusing on it and is more focused on spur-of-the-moment sales of products in its parks.
9. Breakeven footfall for the company is at 1300-1350 per park per day after reopening.
10. In Bangalore, the park will be open only from Friday to Sunday and will be operating land rides only.
11. The company has not been able to start work on the Chennai park and it will renegotiate that whole thing with Chennai Government because it feels that the LBT is an unfair tax burden on the amusement park. Once that clearance is approved, construction will start and then at that point, the company will decide whether it needs debt.
12. The management doesn’t see a big-ticket investment in Odisha.
13. The construction of a new amusement park takes around 18 months typically. The company has not gotten the govt approval to start construction in Chennai and is waiting on it to start the construction.
14. The company has asked for a lifetime waiver of the tax LBT because it feels that the tax is too high and the renegotiation is still going on.
15. The fixed assets in Chennai are valued at Rs 109 Cr including Rs 88 Cr for the land.
16. The biggest issue in setting up amusement parks is the different tax issues in it. At the time of the company IPO, the tax on each ticket was at 5-8%. Because of GST, it has gone up to 18%. And some places like Tamil Nadu add on an extra tax of 10% bringing up the total tax on the ticket to 28% which is too high for a Capex heavy industry.
17. Chennai Capex is expected to be at Rs 300 Cr while Odisha Capex is expected to be at Rs 100 Cr.
18. The idea behind Wonder Kitchen was to keep some of its staff occupied and, with practically zero investment, generate an alternate source of income. This is a highly scalable model as it doesn’t have any requirements for prime real estate. It also provides the company with a high recall value which is important as the company has very low repeat business. The company is now concentrating on perfecting the business model first.
19. The company will be using both its own app-based delivery system and third-party apps like Swiggy and Zomato. Around 30-40% of orders come from third-party apps.
20. The company doesn’t have any issues with raising debt to fund expansion and in constructing new projects. The major roadblock in new expansions is local tax and approval issues which take a lot of time to get through.
21. Currently, the company is manufacturing only for its own consumption. It can build rides and maintain them at a very low cost compared to its competitors. But the management does not see manufacturing as a big opportunity here.
22. The company is on the lookout for new opportunities for operating existing parks. It is not willing to be an equity partner in them and is only looking at managing and running these parks.
23. The company may look for partners or allies for adventure sports and activities but it will not pursue them on its own.
24. The key criteria for selecting a location for the company to build parks are weather and population size in a 300-500 km radius.
25. There are opportunities in other countries. Wonderla has been approached by Sri Lanka and Bangladesh as well. The company is exploring options to see whether it can partner up with someone for it in Sri Lanka.
26. The company is open to Northern India but the issue here is the extreme weather which can force the open park to stay closed for 4-5 months. A better option at such places will be closed or indoor parks.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. However, COVID-19 played a spoilsport for them. The business for the first half of the year was fully impacted with nil operating revenue from park operations. In the meantime, the company has focussed on cost-cutting measures. They also improvised by venturing into the Wonder Kitchen segment. It serves two purposes: keeps the employees engaged and also gives some much-needed revenue. However, it is too small and the business model is still evolving. The Bangalore park was reopened on 13th November after complying with all COVID-induced restrictions. It remains to be seen how much time it will take for normalcy to come back in their business. However, Wonderla has the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

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