Wonderla Holidays – Multibagger Analysis
In this post I would like to provide Analysis on Wonderla Holidays. The company was listed almost 5 years back & still trading at approximated price after Inflation.
Wonderla Holidays Limited operates three largest amusement parks in Kochi, Bangalore and Hyderabad; and the Wonderla resort in Bangalore under the brand name Wonderla.
Promoted by Kochouseph Chittilappilly (of V-Guard) link
It is a Sad Truth that the Investors did not got the V-Guard kind of Appreciation from this stock, which they expected a lot. There can be multiple factors into it like IPO-overpricing, Growth-perspective, Asset-intensive operations, GST-issues etc.
However, due to the Promoter Reputations on High Quality, Corporate Governance, Humanity aspects, the stock has attracted high profile investors like NR Narayana Murthy.
So let us look into the business & value parameters to determine any multibagger potentials.
The company generates income from the 3 main parks in kochi, bangalore & hyderabad. Interestingly, the food business constitutes 39% of the revenue.
Company is expanding to Chennai. plus, adding more rides, in-house manufacturing & improving efficiencies to existing parks. All together these will ensure 150-20% revenue growth in coming years.
Company also have advantage of surplus land which ensures further expansion in coming 10 years. Low Utilization would be a parameter to evaluate.
GST impacted current year Sales, but the latest quarters are improving.
Company has Low Debts which is good in one sense & bad in another view that Leveraged Growth is not there.
Company is adding RFID, No-Queue solutions in the Technical Arena to increase the Footfalls.
No Pledging of shares.
Considered as Holiday Tiger – Revenue goes double during June quarter there by increasing NPA / Idle resources during other periods. Scope of Corporate Outing, Official Programmes rendering during Weekdays would increase the ROE.
High PE is one problem with this stock.
High PEG ratio is a derived problem.
One advantage I can see is that the Promoters are buying back Wondera stocks due to the bear market so one can expect the lows are limited.
Warren Buffett Checklist
|History of Consistently Increasing Sales, Earnings & Cash Flow||Yes.
|Durable Competitive Advantage||Moderate.|
|Future Growth Drivers||Moderate.|
|Conservative Debt (long term debt < 3 Net Profit)||Not.|
|Debt Equity Ratio, Current Ratio||DER is Zero, Current Ratio is Average|
|Return on Equity must be Above Average||No.|
|Low CAPEX required to maintain current operations||Moderate|
|Management is holding / buying the stock||Yes.|
|Price is Under Valued (< intrinsic value)||No.|
|Stock Price is consolidating (now)||Yes.|
|Stock Price is growing in past years along with EPS growth||Yes.|
Additional Futurecaps Checklist
|Consolidated PE, PB Ratio||PE is high, PB is okay|
|Cash Flow Positive, Net Profit % greater than 8%||Yes. Yes.|
|Paying Dividends, Tax||Yes, Yes|
|EPS Growth Rate||Okay.|
|Jump in Trailing Result EPS||Yes. But moderate.|
|Jump in Quarterly Result EPS||Yes. But moderate.|
|Expected Gain in 5 Years||2-3X|
|Price Movement Graph, 52 Week High & Low||Okay|
|Power of Brand||Good.|
|Corporate Governance, Reputation of Leaders||Okay.|
Based on the analysis, I would declare that the Stock definitely has Multibagger properties with expected 2-3X returns in next 5 years.
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