Wonderla Holidays

Hyderabad park also closed now from 15th to 21st March… While parks closure was somewhat expected, what remains to be seen is time for situation to normalize and footfalls once parks open.


Mr. Arun K Chittilappilly is appointed as Whole-time Director.
Mr. Kochouseph Chittilappilly has resigned as Executive ViceChairman and has taken the role of Non Executive Director.

Promoter has been acquiring shares in this drawdown via market purchase.

market is factoring washout for near term, FY 20 EPS is likely to be at 2019 or lower level. Capex lined up.

Valuation and quality is superb - stock is available at book value and promoter buying it, Mr Arun is back to run the show.

slow catch-up to BAU should come back in H2 (current pandemic issue coming under control) but key triggers will be new capex and parks. Dont think stock is going anywhere for next few Qtrs and Growth visibility is not coming back anytime soon.

Was Invested but trimmed position to tracking - plan to reenter at later point.


That’s good news Mr .Arun is back. Most of investor was asking about him in each and every call. About two two qtr stock will be punished, but would be re rating on vision of Arun.


Bang on! This is a consumer discretionary business and prone to economic cyclicality. I have tried valuing this business using three different approaches:

  • Long term PBT margin: 33%. Lets say the company is able to do sales ~280 cr. in FY22 (assuming FY21 is a wash-out). That will translate into a profit ~280*33%*75% ~ 70 cr. Current market valuation implies this business is available at P/E ~ 10 (implying almost no future growth).
  • Replacement cost for 1 park is ~350 cr. (as per FY2018Q4 concall). They have three operational parks, replacement cost ~ 1050 cr., along with ~125 cr. in cash & equivalents. (Replacement value > 1175 cr.)
  • Maintenance CAPEX for the three parks combined is ~20cr. They generate operational cash of ~100 cr. per year, so that makes FCF ~ 80cr. (which is then used for growth CAPEX). The company is available at ~10 times FCF (if management doesn’t reinvest their earnings).

Long term sustainable growth is ~12-15% (10% price increase + new parks). For higher growth (>20%), the company would need to dilute equity or raise debt. Investors were quite bullish in 2016-17. With this cyclical downturn, this reasonable growth company is available at no-growth valuations.



The value of the land at Wonderla is more than the current marketcap.

And what is the rate that you estimate for the land that it owns?

Thats a flawed assumption. Who will they sell to?. I doubt there will be too many takers. One more thing to keep in mind is that, the land is not in the city/outskirts of the city. It will be in some remote place. Usually there is plenty of supply of land there.
Note: My comment is a general one. Not related to wonderla

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If one can believe the management, they seem to be well positioned to see through this crisis. Some experts from recent announcements.

Loss of Revenue

Capacity to Suffer

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020(TTM)
Net Profit -1 11 9 30 30 34 40 51 60 34 38 55 70
EPS in Rs 0 4.11 2.07 6.85 6.91 7.74 9.16 8.7 10.24 5.92 6.81 9.81 12.43
Expenses - 19 35 38 44 57 75 83 101 121 195 181 168 172
Investments 0 0 0 0 0 0 0 194 84 75 12 50 108
Cash Equivalents 0.07 0.3 1.11 0.32 2.48 2.87 20.04 8.31 28.04 8.53 24.86 42.8 22.41
Loans n Advances 0.64 1.49 2.1 0.9 1.45 3.43 5.14 4.62 13.89 26.18 46.81 49.74 3.5
Other Assets etc 0.97 3.37 2.47 2.76 8.34 7.55 6.76 7.64 10.64 24.35 6.32 9.25 35.83

Some forward looking statement talks about backlog of weddings which can be seen as somewhat unavoidable for consumers. However, we need to bear in mind that all hotels and hospitality players will already be ahead in this game.

One overhang was one the leadership succession, but with Arun C coming back this can be considered a non issue. The question now is how is the business model getting impacted because of this and how the management is preparing for this?


Although not an apple to apple comparison, Disney’s theme parks are expected to come back to full footfall only after two years, as per analyst. Hong Kong Park is expected to be the first one to come out of the closure and it would be interesting to see what Disney would do there? Also, other players in China and HK, how are they dealing with this? Things to watch out for Wonderla investors.

  1. Worst case -

–no visitors, no income for time till vaccine or no new cases - min 2 Qtrs.
– company cash is enough to support necessary exp for close to a year at current burn rate, can last longer if situations persist by cutting down gradually
– all capex goes on hold, opex optimization measures to be taken.
– Company Value = Liability - Assets. We are getting it lesser than book value. Land will not get wiped off.
– Prmoters buying indicates something. Promoter integrity and quality is reassuring

  1. This too shall pass
    – Vaccine is found, virus is in control at some point
    – Mkt will reward most beaten but strong balance sheets most handsomely- add Moat
    – Competetion is likely to suffer worse who has higher debts
    – Safety, security, distancing can be better managed in open amusement parks than closed spaces IMHO ( offices, malls, multiplexes, restaurants etc).
  • Imagine no footfalls to growing scenario

If business it shutting down for an year - can I still hang in? being a natural optimist I am - trouble times + moat biz+ promoter quality + strong balance sheet+ belief in biz model.

This is one of satellite portfolio bet - less allocation for now but may add on dips - though long shot.


how much percent of disney footfall is outside city/country as compare to wonderla. domestic travel will come back soon as compare to int.

Moat of Wonerla , has been discussed many times, but the fact is the business wont grow until and unless footfall increases dramatically, everytime for the last 2-3 years something or the other has shown the vulnerability of the business model, whenever they become stable another event happens which is totally out of control of the management and the business gets hit. So basically only when the footfall increases and keep on increasing Q on Q then only the business is going to get valued in terms of stock price.
Impacts that has happened in the last few years is , Nippah Virus in Kerala, Ride accident in Bangalore(social media made a small incident viral), Floods in Kerala, 2times, and now Covid19, in all these cases Management was just helpless to do anything. So investing in this and expecting to get good returns is going to take very long time.
Invested at higher levels! Not yet averaged as it can further go down once promoter buying gets reduced.


Pardon for the amateur question.
Regarding the 300+ crore increase in equity due to revaluation of land, how can we trust the number? is there any way to verify it?

I remember seeing a valuation report on its website if you can locate it… Land is usually 30-50% of the prevailing residential rates in that region so that can be used as a ballpark

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Buffett teaches that the best business is one which can generate high economic returns on large amounts of incremental capital over long periods of time.

In this context, I studied the business of Wonderla. I feel that the business doesn’t have the capability to generate good economic returns on the incremental capital.

Let’s take the upcoming Chennai park. The projected capex is 365 crs. Assuming that the park starts getting 10 lakh visitors in the first year (highly improbable but still taking the best case scenario), average revenue of Rs 1000 per visitor. The revenue would be 100 crs per year. EBITDA margin of 45% leaves EBITDA of 45 crs. Maintenance capex of 8-10 crs leaves pre-tax owner earnings of 37 crs. On an investment of 365 crs, that is just 10% ROCE. And this is assuming the best case scenario and this is pre-tax.

Let’s take the Odisha park which is to be built on an asset light model.The projected capex is 110 crs (without land) . Assuming that the park starts getting 6 lakh visitors in the first year (highly improbable but still taking the best case scenario), average revenue of Rs 600 per visitor. The revenue would be 36 crs per year. EBITDA margin of 45% leaves EBITDA of 16 crs. Maintenance capex of 5-7 crs leaves pre-tax owner earnings of 11 crs. On an investment of 110 crs, that is just 10% ROCE. And this is assuming the best case scenario and this is pre-tax.

The economics of the business doesn’t look attractive to me. Am I missing something ? Please share your views.


Loss in revenue of 35 Cr as estimated by the company

The amusement parks business is not an asset light model but is still economically feasible. When a new park is operational, it takes a few years to reach an optimum utilization level. The Hyderabad park did revenues of 57, 64, 76 cr. in the first 3 years of operations. It takes somewhere close to 5 years to reach revenues of 100 cr. And then incremental revenues are mostly driven by ticket price increase as footfalls reach a steady state. This is clearly seen in footfall numbers of Kochi (8-10 lakhs/year) and Bangalore (10 lakhs/years) parks. On the other hand, once the park is constructed, there is very little incremental capex (maintenance capex < 10 cr./park) to create additional revenue. That’s why these kind of businesses globally are valued relative to their book value.

I think this would be an unfair way of analyzing Wonderla. The beauty of building a park is that once you put up the upfront capex of building the park, there is very little incremental capex that is required to attract additional customers to the park. Maybe you have to introduce the odd new ride every other year to keep things fresh, but nothing majorly substantial.

The thing missing in your analysis is what the ROCE looks like 10 years after building the park. The gross capital employed would still be roughly the same (maybe 400 cr instead of 35), but hopefully, the park would have attracted many more visitors, increased ticket prices, increased F&B spend. So maybe after 10 years the revenue would be 300 cr and the EBITDA would be 135 cr. Maintenance capex would be a little higher so pre-tax earnings of around 120-125 cr giving a ROCE of 34-35% on the initial investment. Now think of what would happen if another player wanted to build a park opposite Wonderla’s because he is attracted to this high ROCE. By now land prices may have gone up substantially, there is 10 years inflation, so the same park that Wonderla built in 350 cr, might cost a new player 1000 cr to build after 10 years; and even then his best case scenario would be that maybe half the guests who went to Wonderla would maybe come to his park. The economics would look really bad compared to Wonderla, this is a big deterrent for any competition to arise in the same location that Wonderla already has a park. Wonderla would have a natural monopoly wherever he builds his park.