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Wonderla Holidays Ltd.
Regd. Office: SBICAP Securities Limited, 191, Maker Towers 'F', Cuffe Parade, Mumbai 400 005
For the list of our branches refer to the website: www.sbicapsec.com
Company Overview
Wonderla Holidays Ltd (Wonderla), founded in 2002, is one of the
largest amusement park operators in India. It currently operates
two amusement parks situated in Kochi and Bangalore under the
brand name `Wonderla' and is in the process of setting up its third
amusement park in Hyderabad. The company also owns a three
star resort in Bangalore under the name Wonderla Resorts which
has been operational since March 2012. The company is promoted
by Mr. Kochouseph Chittilappilly (promoter of V-Guard Industries)
and Mr. Arun Kochouseph Chittilappilly.
Key Highlights
Footfalls across the two amusement parks have grown at aCAGR of 7.42% during FY 11 to FY13.
The company in all has 42 water based attractions and 68land based attractions in Kochi and Bangalore.
The company has won several awards for its innovative ridesfrom Indian Association of Amusement Parks and Industries`IAAPI'.
The company has in house manufacturing facility for some ofits rides which helps in maintaining cost effectiveness, as wellas it helps in designing rides as per their requirement anddemand.
The company has in house mechanism for maintenance of allrides through which it has gained expertise in overallmanagement of its attractions.
Apart from expanding their presence in Hyderabad thecompany also plans to set up its operations in Chennai andexpand its current operations in near future.
The total revenue of the company has increased to Rs139.17Cr in FY13 from Rs 63.30 Cr in FY09, a CAGR of 21.77% andthe net profit has increased to Rs 33.48 Cr in FY13 from Rs11.03 Cr in FY09 at a CAGR of 31.99%.
ISSUE DETAILS:
Date of Opening 21st April 2014
Date of Closing 23rd April 2014
Price Band Rs 115-125
Issue Size @ Rs 115-125 Rs 166.7 - Rs 181.2Cr
No. of Share Offered 14,500,000
Face Value Rs. 10
BRLM Edelweiss Financial Services Ltd.,
ICICI Securities Ltd.
Registrar Karvy Computershare Pvt Ltd
Bid Lot Maximum 1600 shares @Rs 125
Post Issue Share Capital Rs. 56.5 Cr
Credit Rating CRISIL 'IPO Grade 4/5'
(Above average fundamentals)
Source: RHP, SSL Research
For complete information and a complete list of the risk factors,please refer the Red Herring Prospectus.
Pre Issue No. of Shares %
Promoter & Promoter Group 40,100,222 95.48
Others 1,899,778 4.52
Total 42,000,000 100.00
SHAREHOLDING PATTERN
OBJECTS OF ISSUE
Description (Rs. Cr.)
To set up amusement park, Wonderla Hyderabad 173.30
General corporate purposes [ • ]Total [ • ]
Post Issue No. of Shares %
Promoter & Promoter Group 40,100,222 70.97
Public 14,500,000 25.66
Others 1,899,778 3.36
Total 56,500,000 100.00
Retail Research IPO Note
Sector: Leisure and entertainment View: Subscribe
19 April 2014 Price Band (`): 115 - 125
Wonderla Holidays Ltd. Leisure and Entertainment
SBICAP Securities Limited 19 April, 2014 • 2
Operational experience and established brand
The company has been in the amusement parks industry for over 13 years, and over the years it has built significant brand
equity especially in southern India. The company has further strengthened its brand portfolio with the launch of Wonderla
Resort in Bangalore, with corporate tie-ups and various other offers aimed at different customer profiles, markets and price
segments.
In-house manufacturing capability
The company has developed in-house manufacturing facility in Kochi to manufacture/ construct amusement rides and attractions,
apart from the amusement rides procured from manufacturers within and outside India. The experience in running amusement
parks and understanding customer preferences enables the company to conceptualize and develop innovative rides. Key
managerial staff visits other amusement parks across the world to learn more about the prevalent market trends. Such research
enables the company to conceptualize new attractions that would enhance the experience of visitors.
High entry barriers reduce threat from new entrantSetting up an amusement park requires considerable amount of land and also lot of litigations are involved along with it. Prices
of land have gone up many folds in last 4 to 5 years which makes setting up an amusement park a costly affair. Apart from
acquiring land the getting various sorts of clearances can also be tedious task which in all proves to be a significant entry
barrier for other companies to get into this business.
Strong financial performance; high ROCEWonderla has been able to maintain EBITDA margin of over 45% over the past five years. Further, the business is a negative
working capital business as most payments are received upfront (ticket sales). Also, incremental capex per park is Rs 25-50
mn per year which is small compared to the overall investment. These coupled with healthy growth in footfalls have resulted in
healthy cash flow from operations (growth of 20.5% CAGR over FY09-13). PAT has increased at CAGR of 27% to Rs 33.48 Cr
in FY13 from 11.03% in FY09. PAT margin improved from 14.5% in FY10 to 24.3% in FY13, further, RoCE has increased from
18.4% in FY09 to 40.4% in FY13.
Rise in discretionary spending and large youth population to drive demand
India's increasing discretionary spending on the one hand and a large young population on the other work in favor of the
amusement park industry. India's per capita income has grown at a five-year CAGR of 16%. More importantly, the share of
discretionary spending in overall expenses has increased rapidly from 19% in FY1981 to 45% in FY12. This has led to higher
spending on leisure and entertainment activities such as vacations, visits to multiplexes, restaurants and amusement parks.
Also almost 30% of the Indian population is below 14 years of age - an age bracket that is more likely to drive a family's visit
to an amusement park. With a sizeable population in the 15-35 age group interest in amusement parks is also expected to rise.
For complete information and a complete list of the risk factors, please refer the Red Herring Prospectus. • Source: RHP
Investment Rationale
Wonderla Holidays Ltd. Leisure and Entertainment
SBICAP Securities Limited 19 April, 2014 • 3
Growth Strategies
To expand business operations by setting up new amusement parks in other cities
The company intends to continue to expand business operations and further develop brand 'Wonderla' by setting up new
amusement parks in other parts of India and thereby cater to a wider customer base. The company intends to capitalize
on experience and expertise in the amusement park industry and leverage the existing goodwill associated with the
brand to establish and expand amusement parks in newer geographies. The company is in the process of identifying a
suitable parcel of land in Chennai for setting up amusement parks.
Improvise existing amusement parks to increase Footfalls
The company constantly monitors and studies the usage of rides and attractions by visitors as well as conduct surveys to
evaluate customer choices and preferences. The technical department constantly innovates newer attractions based on
concepts that are popular at amusement parks. The preferences of visitors play a critical role in decision to introduce new
rides and attractions. The company constantly upgrades rides or introduces new innovative attractions and rides to
improve visitor experience, which helps in maintaining consistent increase in Footfalls.
Further expansion of in-house ride design and manufacturing capabilities
The company has developed in-house manufacturing capabilities to manufacture / construct amusement rides and
attractions for amusement parks. The company introduces new rides and attractions based on study and understanding
of customer preferences, the popularity of existing rides and attractions at amusement parks as well as the research
done by key employees by visiting amusement parks in other parts of the world. The manufacturing facility has designed
and executed several rides and attractions for amusement parks in Kochi and Bangalore on the basis of research
and conceptualization. The company intends to continue to invest in such manufacturing facilities at the upcoming parks
as well.
Risk factors
The Company is currently involved in two litigations pertaining to 14.70 acres of land acquired in connection with Wonderla
Hyderabad which if determined against the company, could cause financial loss or constrain ability for future expansion
at Wonderla Hyderabad.
Inability to find locations to open and operate amusement parks on commercially viable terms and successfully acquire
the requisite land could adversely affect results of operations and business. Further, land is subject to compulsory
acquisition in India which may have an adverse effect on the business, financial condition and results of operations.
The company has not entered into any annual maintenance contracts in relation to the machinery operated at the parks.
The occurrence of an accident or a mechanical breakdown which are not prepared for in relation to the machinery may
have an adverse effect on the business, financial condition and results of operations.
Wonderla Holidays Ltd. Leisure and Entertainment
SBICAP Securities Limited 19 April, 2014 • 4
For complete information and a complete list of the risk factors, please refer the Red Herring Prospectus.
WONDERLA HOLIDAYS LIMITED
Pre Issue Post Issue
FY13 9M Dec.2013 (Annualised)
Price Band
Particulars 115 125
Net Sales 137.9 159.6 159.6
Total Income 139.2 162.0 162.0
EBIDTA 62.8 74.9 74.9
PAT 33.5 41.3 41.3
Equity Share Capital 42.0 56.5 56.50
No of Equity Shares 4.2 5.7 5.7
Face Value 10.0 10.0 10.0
EPS 8.0 7.3 7.3
CMP 125.0 115.0 125.0
Cash and Bank 2.9 1.0 1.0
Debt 18.6 18.5 18.5
Net Worth 121.4 152.4 152.4
Market Cap 525.0 649.8 706.3
BV per share (Rs) 28.9 27.0 27.0
PE(x) 15.7 15.7 17.1
P/BV (x) 4.3 4.3 4.6
Enterprise Value 540.7 667.3 723.8
Mcap/Sales (x) 3.8 4.1 4.4
EV/Sales (x) 3.9 4.2 4.5
EV/EBIDTA (x) 8.6 8.9 9.7
EBITDA Margins (%) 45.6 46.9 46.9
Net Margins (%) 24.3 25.9 25.9
ROE (%) 27.6 27.1 27.1
ROCE (%) 31.4 25.0 25.0
Financials and Valuation Snap Shot:
Relative Valuation:Relative valuation for 'Wonderla Holidays limited' cannot be doneas we feel that no other company seems to have similar orcomparable business model.
Recommendation:We recommend to SUBSCRIBE to this issue at cut off price.
Wonderla Holidays Ltd. Leisure and Entertainment
SBICAP Securities Limited 19 April, 2014 • 5
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