Wonderla Holidays Ltd operates amusement parks in India and is looking to expand. It currently has parks in Bangalore and Kochi with a third park planned for Hyderabad. The company is in a growing industry as India's economy and middle class expand, increasing discretionary spending on entertainment. However, the company faces risks from accidents reducing footfalls, a economic slowdown decreasing consumer spending, and its seasonal business with lower revenues outside of peak quarters.

1. Wonderla Holidays Ltd(WHL)
-Emerging Business with good long term potential
TRUSTWIN CAPRESEARCH SERVICES PVT. LTD.

2. Content Index
•Wonderla Holidays Limited – Investment Snapshot :- Slide #3
• Amusement Park Industry – An Overview:- Slide #5
• Investment Arguments :- Slide #15
•P&L - Slide #28
• Concerns & Reasoning :- Slide #29

3. Wonderla Holidays– Investment
(as on Oct 08, 2015)
Snapshot
WOHL.NS
FII - 9.13%
Other Holdings -17.90%
Recommendation :- BUY
Maximum Portfolio Allocation :- 2%
Investment Phases & Buying Strategy
1st Phase (Now) of Accumulation :- 80%
Current Accumulation Range :- 300-305 Rs
Core Investment Thesis :
The company is in Amusement parks space which has been
growing at a fast clip due to rising footfalls which has been
preferred as an entertainment destination not only in India but
also globally.
Current Market Price – Rs. 300
Current Dividend Yield – 0.50%
Bloomberg / Reuters Code –WONH. IN/
BSE / NSE Code – 538268/ WONDERLA
Market Cap (Rs. Cr) – 1689
P/E - 31
Face Value – Rs. 10
52 Week High / Low – Rs. 348.50 /
Rs.240.20
Promoter’s Holding - 70.99%
DII - 1.98%

4. Key Investment Highlights
1.) Presence in a growing segment :- Company caters to the Entertainment Industry which has been
growing rapidly which provides immense opportunities to the companies in the sector.
2)New venues to drive growth- Company currently has presence in Bangalore and Kochi and is all set to
enter Hyderabad in FY17 which will enable the company to drive growth.
3.) Strong Pricing Power :- Despite Company has strong pricing power with prices increasing at a CAGR of
10% due to its presence in cities where there is no major competitors.
4.) Growing Footfalls:- The companies footfalls has been around 23.4 mn which is higher than the footfalls
registered by their competitors.
5) Scope for higher ticket prices :- The company charges Rs.754 per head as against Rs.2000/- charged by
competitors like Adlabs Imagica.
6.) In-house Manufacturing :- Company has an in-house manufacturing facility located at kochi which
manufactures /constructs rides and attractions for both the parks.
7.) Wide range of products:- Company a wide range of water and land-based attractions of22 water-based
attractions and 33 land-based attractions at Wonderla Kochi and 20 water-based attractions and 35 land-
based attractions at Wonderla Bangalore.
8) Increase in Disposable Income:- The company is likely to benefit from rising disposable income due to
implementation of pay-commission recommendations and strong GDP growth.
9.) Management/ Corporate Governance :- The company has a good management and adhere to strong
corporate governance norms. The company is run professionally by a team of professionals who have a
strong understanding of the business and have a strong vision about its business.
10.) Valuations :- In spite of so many advantages, the company is quoting at reasonable valuations for the
Quality of this stock which has a strong operating performance and provides revenue visibility.

5. Industry Opportunity & Potential
- An Overview

6. Global Amusement Park Industry
•The global amusement park industry is valued at about USD 29.5Bn in 2015 and is expected to reach about
USD 32Bn in 2017.
•The global theme park industry recorded good growth in 2014 with top amusement parks recording a
growth of about 4%.
•The majority of the amusement parks are located in the US and Europe which has about 330 mn and 165
mn visitors per annum respectively.
•Asia is the fastest growing geography and is expected to outpace the major players in US and Europe due to
favourable demography and fast growing economies.
Revenue Share of Various Geographies

7. Footfalls of top global Amusement parks

8. Industry Segmentation
•The amusement park industry is primarily divided amongst large, medium and small parks depending upon
various parameters like capital investments, annual revenue, number of rides, land area, ticket price etc.
•India, amusement parks and water parks dominate over theme parks. Among the amusement parks, large
parks are considerably smaller in number compared to medium and small parks.
•Amusement parks across India offer varied experience to users ranging from dry rides, wet rides, snow
parks, resorts, shopping malls etc, though most of the rides remain similar in nature.
•Some of the Indian amusement parks are coming out with a resort to provide facility for overnight stay
replicating their global counter parts.

9. Products and Services

10. Competitive Landscape in India

11. Rapid Urbanization to drive growth
• The number of people moving to bigger cities is increasing rapidly which has resulted in more and more
people looking for entertainment.
•Currently the Indian cities have limited outdoor entertainment options and amusement parks is one of the
major entertainment which can address their needs.
•The proportion of population which is residing in urban areas has increased from 11.4% in 2001 to about
28.53% in 2001 and this is expected to increase to 40.76% in 2030.
•The focus of the new government towards revival of growth in urban cities further provides philip to the
urbanization rate in India.

12. Favourable Population Demography
•India has about 61% of the population below the age group of 30 years who are the main drivers of
discretionary spending.
•The consumer discretionary spending as % of consumer spending to increase from 55% in 2007 to 61%
2020.
•The average age of India’s population in 2020 is expected to be 29 years which is the lowest in the world.
•The demographic factor plays positive role in discretionary spending which is positive for entertainment
industry like amusement parks.
Indian Population segmentation based on age group

13. Increasing Tourism Spend
•The domestic tourism in India is growing rapidly at a CAGR of 13% which is the biggest growth driver for the
Industry.
•With rising income levels, Indians are spending more on tourism related activities which is likely to increase
number of people visiting amusement parks.
• Holidaying, leisure and recreation related tourism constitutes major part of the domestic tourism.
•The local residents form majority of the footfall at 84% followed by domestic tourist, which form 15% while
Foreign tourism constitutes a negligible part, <1%, of total visitors in the park.

14. Ticket Sales dominate Industry
• Ticket Sales dominate revenue stream for Indian amusement parks with 80% share while it forms only 33%
globally.
•The Food and Beverages segment contribute just 18% of revenues in India it contributes about 34% globally.
•The resorts and rentals in India contribute just 2% of revenues while it contributes 33% globally . This trend
is expected to change in India as visitor preferences change and amusement parks become more of a
destination tourism than a single day entertainment.
•As footfalls begin to improve AD revenues are possible growth drivers apart from wedding receptions and
social events held at amusement parks though these are miniscule at present.

15. WHL – Investment Arguments

16. Company Snapshot
•WHL was founded in 2002 and is one of the largest amusement parks in India which operates under the
brand Wonderla.
•WHL also owns and operates a resort besides an amusement park in Bengaluru under the brand name
Wonderla Resort.
•WHL has 22 water-based attractions and 33 land-based attractions at Wonderla Kochi, situated on 93.17
acres of land and 20 water-based attractions and 35 land-based attractions at Wonderla Bangalore, situated
on 81.75 acres.
•WHL is in the process of setting up the third amusement park in Ranga Reddy district of Andhra Pradesh,
Wonderla Hyderabad.

17. Top ranking and strong brand recall
•WHL is ranked among the top 25 Amusement parks in Asia
according to Trip advisor.
and best amusement park in India to visit,
•WHL currently ranked at the eighth place in Asia has given the company the strong brand recall and visibility
for the management to expand into newer. Territories.
• With WHL expanding in Chennai and Hyderabad couple of parks are being opened in next few years and
total of 4 parks would be operational by 2018 .WHL also is planning to enter north India and become a pan
Indian player.

18. Rising Footfalls - A major positive
•WHL’s two amusement parks at Kochi and Bangalore has clocked footfalls CAGR of 7.9% over the past five
years between 2009-14.
•WHL’s footfalls has risen from 1.57Mn in FY09 to about 2.30 Mn in FY14 with 5 year CAGR of Bangalore
park recording 13.3% while the Kochi park recording steady footfalls growth of 6-7% YoY.
•WHL’s clocks high footfalls in Q1 due to summer vacations, low footfalls in Q2 due to monsoons, high
footfalls in Q3 due to festive season & school picnics and low footfalls in Q4 due to exam season.
•WHL s derives major revenues during the summer vacation period of April and May, and in December if
there are no rains.

19. Rising Average Ticket Price
•WHL Kochi park’s average ticket price has increased from Rs.278 in FY09 to about Rs.469 in FY14 a CAGR
growth of 11%.
•WHL Bangalore park’s average ticket price has increased from Rs.342 in FY09 to about Rs.530 in FY14 a
CAGR growth of 6%.
•WHL’s blended average ticket prices increased from Rs.342 in FY09 to about Rs.530 in FY14 a CAGR growth
of 9.1%.
•WHL’s blended average ticket prices is likely to rise by 10% per annum and the management has also
indicated that it is possible to raise ticket prices by 10% per annum.

20. In-House Manufacturing
•WHL is immensely supported by its in-house manufacturing which not only cuts downtime but also saves
cost of procuring and importing a new ride.
•The cost of an external agency for designs and rides of a park will be about Rs.10 to Rs.20/-Cr and WHL
saves this amount on account of its in-house expertise.
•About 30% of WHL’s rides are manufactured in-house which helps the company to save about 30% on
customs duty on imported rides and spare parts.
•WHL incurs about 4-5% of its revenues on maintenance compared with other parks which incur 15% of
revenues on maintenance as WHL uses its own technical team for maintainance.

21. Upcoming Hyderabad Park
•WHL is setting up the Hyderabad amusement park with an investment of about Rs.250 Cr for which land
has already been acquired.
•In the initial stages the park has the capacity to handle upto 10000 visitors per day and the total number of
rides is expected to be 42 with 24 land rides and 18 water rides.
•The park is expected to have a footfall of 0.75 mn in the first year and is expected to touch about 1mn in the
subsequent years.
•WHL is expected to price the tickets as in Bangalore and expects to increase ticket prices by 10% per
annum considering the per capita income of Rs.132862 which is the highest in South India.

22. Upcoming Chennai Park
•WHL is setting up the Chennai amusement park with an investment of about Rs.300 Cr and is expected to
commence operations in 2017.
•WHL is likely to fund most of this project through internal accruals from the free cash flows being
generated by other amusement parks and the remaining through debt.
•The park is expected to have a footfall of 1 mn in the first year because of the larger market and the
footfalls is expected to rise by 4-5% every year.
•WHL ‘s Chennai park is expected to have different rides to withstand competition from existing players such
as MGM Dizee world, Kishkinta and Queensland which have been in operation for many years.

23. Holiday season witnessing higher footfalls
•WHL generally has footfalls of 3500 per day and this increases during weekdays and peak season which is
during holidays.
•WHL is currently handing 29% of its capacity and the existing parks can handle upto 12000 visitors per day
which is most likely in the holiday season.
•The Amusement park business is seasonal with Q1 & Q3 to be strong because of more number of holidays
and festive season.
•The Q3 is a strong quarter because more number of festivals come in during the quarter such as Dussehra,
Diwali, Christmas & New Year.

24. Conservative Food & Beverages Charges
•Unlike multiplexes and other amusement parks where Food and Beverages are sold at far higher rates
than the MRP, WHP charges such items at MRP.
•WHP has about 7 restaurants in both Kochi and Bangalore parks, out of which the company owns Waves
restaurant in Bangalore and Kochi park in Kochi. For the remaining restaurants the company follows a
revenue sharing model wherein it receives 25% of revenues as its share.

25. Turnaround in Wonderla resort to aid margins
•WHL started the Wonderla resort in 2012 to enable visitors to stay longer at the park, which would lead to
increased spends on their part and also enhance visitor experience.
•The resort has 84 luxury rooms, 4 banquet halls / conference rooms, totaling 8,900 sq ft with a capacity to
hold 800 guests and has a well equipped board room.
•During the past 4 years the resort is making losses at both the EBITDA and PAT levels due to lower
occupancy rate and high fixed cost.
•During the year FY15 the company reported profits of Rs.2 Cr at the EBITDA levels as occupancy rates
improved from about 35% levels to about 45% during the current year.

26. Addition of new rides
•WHL consistently adds about a new ride for every two years to keep pace with competition and also
improve the footfalls in their parks.
•WHL planning to add an interesting roller coaster ride in Bangalore which would be India’s first reversing
roller coaster and will be open to public by year end.
•WHL is flexible in adding new rides as seen from the Chennai park where it is adding new rides to take on
competition from existing as well as new players.
Historical no. of rides at Wonderla

27. Flexible pricing strategy
•WHL has opted for flexible pricing strategy to activate footfalls by offering lower prices during weekdays
where the footfalls will be lower.
•WHL footfall is likely to be around 6000 per day compared to 3000 during weekdays and ticket prices are
tickets are priced at premium of 25% to the weekday prices.
•WHL tickets are priced at premium of 10% to the weekend tickets and during the peak season which is
generally during holidays & festive season parks witness footfall of 8000 per day.
Pricing at Kochi and Bangalore parks respectively

28. Earnings Projection – P&L Account
• WHL revenues are expected to
grow by 18.5% and 20% in FY16 &
FY17 driven by increase in footfalls
and average ticket price.
• WHL has EBITDA margins in the
range 44-45%.We estimate EBITDA
margins of about 47% and 48% in
FY16 and FY17 driven by
breakeven of their resort business.
• WHL is likely to report PAT of
Rs.56 Cr in FY16 and 69 Cr in FY17
with an EPS of Rs.9.86 and
Rs.12.19 in FY16 and FY17
respectively.
•WHL‘s
growth
23.63%
EPS is likely to record a
of about 10.04% and
in FY16 and FY17
respectively.
Particulars(Rs.Cr) FY14 FY15 FY16E FY17E
Net Sales 154 182 216 259
% Chg 11.45 18.18 18.5 20
Total Expenditure 83 102 114 135
% Chg 19 40 21 17
EBITDA 70 81 101 124
EBITDA Margins(%) 45.45 44.51 47.00 48.00
Interest 1.63 1.67 1.71 1.77
Depreciation 13 16 19.41 23.29
PBT 58 73 80 99
PAT 40 51 56 69
EPS 9.5 8.96 9.86 12.19

29. Concerns & Reasoning
1.) Accidents and Natural calamities to impact footfalls :
Accidents or natural calamities will affect footfalls, resulting in lower revenue. Not only will accidents lead to
negative publicity, affecting footfalls, but it will also expose the company to possible financial liability and
legal proceedings.
2.) Slowdown in consumer spending :
With anticipated recovery in the economy due to policy changes, consumer spending is expected to recover.
However, if the economy does not recover, it may adversely affect consumer spending. Amusement parks
are affected by consumer discretionary spending and any adverse event in the economy will result in fall in
footfalls.
3.) Seasonal nature of business :
Q1 and Q3 are the best quarters for the amusement parks business. In other quarters, schools have exams
affecting footfalls. Q1 and Q3 contribute ~65% to the company’s revenue. However, due to any adverse
reasons, if the park remains closed during peak quarters, WHL’s overall performance will be affect.
4.) Failure to acquire land :
WHL has acquired land for its amusement parks in Hyderabad and Chennai. Going forward, it has plans in
other cities as well. However, inability to find land in those states can affect the company’s growth strategy,
which will again result in flat revenue growth and profitability.

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