Nicco Park: Wonderla of East India?


(shreys) #1

Nicco Parks is an amusement park located in the City of Joy- Kolkata. It has been operational for 26 years now. It’s spread over an area of 40 acres in the Salt Lake locality. It’s widely referred to as the Disneyland of Eastern India. It has consistently had more than 1 million footfalls. Despite not having added many rides in recent years the number of visitors hasn’t dipped significantly. It has a great brand recall. It’s undoubtedly the go to location for residents of Kolkata to unwind. It might seem staid compared to the parks in Mumbai, Bangalore and other major cities, it’s target consumers seem to be enjoying their time at the park. It’s reviews are favourable. Also, the ticket prices are reasonable despite an upward revision. They have a 60 percent customer retention rate. The park hasn’t been spending a lot on its marketing but continues to have a steady stream of visitors which might be attributed to positive word of mouth publicity.
Financials:
It derives 75 % of its income from sales of tickets and other allied services. They also have an amusement parks consultancy division, but it isn’t a major source of business. They operate this segment because of their extensive experience in this industry.
The company reported a total income of 45 .crores for the year ending in March,2017.
Their net profit was around 5.5 crores.
Their net profit margin is 12 percent which is comparable to that of its peers Wonderla.
The company has a dividend yield of 0.38% at a price of 39.75 Rs per share. Promoter shareholding is steady at 62.74 %.
It’s trading at 29 times its earnings. Prima facie, it may appear to be expensive but comparing it with its peer Wonderla it’s trading at a much lower valuation. Sure, Wonderla is an excellent brand and will grow much faster than Nicco parks. But, it can’t be denied that Nicco Parks is the undisputed leader in Eastern India. It has decent pricing power. It’s a great way for the privileged as well as the relatively unprivileged to have a good time.
Risks: The development of similar parks in Kolkata might adversely impact the business.
Visitor injury could dampen the mood of visitors and have serious consequences.
Opportunities : An increase in the disposable income augurs well for the park. Excellent brand recall for the park.


(SkyWalker) #2

From where future growth will come? Increasing ticket price has limited scope, do they have any plans to start other Parks?


(shreys) #3

Dear @SkyWalker,
Many thanks for reading the post.
Reasons why I think Nicco Park can do better in times to come:
Nicco Park has a significant brand recall. The absence of comparable amusement parks in Eastern India augurs well for this company. As the disposable income increases, amusement parks are the direct beneficiaries. It’s a great way to unwind. And the first name that comes to people’s minds in Kolkata is Nicco Parks. Despite being more than 2 decades old, rides that might be staid, people still frequent this park. There is no other alternative park. They’re in a great position thanks to the tremendous customer loyalty they enjoy. It can be leveraged to advertise extensively. Merchandising could be another way. Also, they have a decent consultancy business. As the amusement park business expands this company will benefit. They’re veterans in this industry and can monetize their expertise. Also, consistency in their performance is something I value very much. Also, it’s centrally located. Their real estate is precious.


(manmohan) #4

I don’t know about the Nicco Park in Kolkata or other places, but there is one in Bhubaneswar and its not in very good condition. Its mostly dilapidated, with most rides broken or on the verge of breaking. I have many friends in Bhubaneswar but they don’t have any good things to say about it.


(shreys) #5

Dear @manmohan ji, Many thanks for sharing your thoughts. I received the same feedback as yours for the Bhubaneshwar park from others who had visited it. Could you share your thoughts on the land the park is built on? Is it in a good locality? Maybe the land is very valuable.


(manmohan) #6

The locality is really good and the land prices in the area have increased lot in past 10 years or so. But I don’t know if they own the land or are leasing it.


(shreys) #7

Many thanks for replying. It seems that Nicco park Bhubaneshwar does not belong to this company. It was built by the Nicco group in association with Bhubaneshwar development authority. The park in Kolkata was also built by the Nicco group but in association with the government of West Bengal. They’re probably managed by separate entities. Just Nicco park Kolkata belongs to the company.


(raj66) #8

looks like a very good asset play . 40 acres in salt lake city . forget what it is making , 40 acres in salt lake is worth 1600 crores nearly and with an total number of shares of 5 crores , u are getting a company for nothing as share price is 38 , buy shares now wait for the real estate moghuls to step in even if the co is not doing much business ,


(sri krishna bhutra) #9

Is it a freehold land or lease hold land? Most of the land in Salt lake as far as I am aware of is a lease hold one with lease of 99 years. What are the pros and cons of leasehold is what one should see.

Regards
Krishna


(Capsule91) #10

Guys, just bumped into this thread… I happen to be from kolkata n i live very close to nicco park…
So i can help out with any questions u might be having…
Just to mention, nicco park has a serious compitition to its business from water park also nearby to nicco… Aquatica…
And from the local footfall observation, it is a very seasonal business…


(raj66) #11

thanks buddy , for the info , just find out if the land is owned by them or leased out


(Capsule91) #12

As far as i know, the whole salt lake area has is leased land, but nicco park is in a different sector, not in core salt lake, i will verify n tell…


(raj66) #13

ty , BTW its not worth burning midnight oil for investments , can wait ,( telling u to take care of your health , u are up at 2-3 am IST )


(Capsule91) #14

Thanks raj, i have a busy schedule n less time for sleep…


(raj66) #15

I was very impressed about your canslim approach to various stocks . still insist get 6-8 hrs sleep . u will not miss anything , Take ur time to find out about the nicco parks , no hurry


(Kushal Dakalia) #16

Hi All

Anyone has idea regarding, in which head under sales the rental revenue of Nicco Park is recognised.

It has in total 3 marriage/party destinations - Big Lawn-1, Big Lawn-2 and Wet-O-Wild.
Further, Nicco Park also owns the land in which West SIde Pavillion(Another Big wedding destination of Kolkata) is build.

If you hire the place for wedding you would be charged around Rs.5 to 10 lacs per day (Depending upon the size of the destination) plus decorator there is fixed (you cant bring your own decorator), who will charge you another Rs.10-15 lacs(depending upon the type of decoration you want).

Considering 20% occupancy (bare minimum) revenue of atleast 10 crores will come from renting of these wedding places.

No where in there annual report there is disclosure of this revenue stream of the company.

Request people to kindly provide clarity in this matter.