ICICI Direct has given Buy recommendation for Wonderla Holidays recommended buy rating on the stock with a target price of Rs 250 in its research with a target price of Rs. 250 in its research report issued on Jun 10, 2021
ICICI Direct’s research report on Wonderla Holidays
Wonderla Holidays reported a strong recovery in earnings post reopening of parks at Bengaluru, Kochi and Hyderabad in Q4FY21. Revenue for the quarter improved sharply from Rs 4.9 crore to Rs 33.3 crore QoQ though revenue remained down 21.4% YoY as parks were functional only during Thursday-Sunday till February 2021 while they remained open all seven days in March. The company achieved total footfalls of 3.11 lakh against 4.05 lakh last year. Thus, Wonderla managed to clock EBITDA of Rs 2.5 crore vs. EBITDA loss of Rs 10.1 crore in Q3FY21. However, it was down 49.3% YoY. Net loss of Rs 4.9 crore is mainly attributable to depreciation charge while the company managed to report cash profit of Rs 2.5 crore. The ongoing second Covid wave in India has again led to a closure of parks from April 2021. With debt free status and no capex in FY22E, we believe Wonderla should be able to tide over the Covid induced challenges in FY22E. While H1FY22E again looks tough, with easing of restrictions post stabilisation of infections (likely from H2FY22E) led by increased vaccinations, going ahead, in the country, we expect a rebound in demand from H2FY22E. This is expected to lead to healthy margins and profitability aided by tighter cost controls. While FY22E would be a mixed bag though better from FY21, we expect the company to attain healthy revenue above pre-Covid levels in FY23E. We also expect Wonderla to attain highest EBITDA margins leading the company to report PAT over Rs 75 crore.
Further, the encouraging Q4FY21 performance and ongoing vaccination drives raise our hopes on a strong demand recovery as and when normalcy resumes. With improved demand visibility, we now upgrade our rating from REDUCE to BUY with a revised target price of Rs 250/share (i.e. 19x FY23E P/E, earlier TP: Rs 110).