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

CMP: 300.00

Website: https://www.wonderla.com/

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.

Business Evaluation

The company generates income from the 3 main parks in kochi, bangalore & hyderabad. Interestingly, the food business constitutes 39% of the revenue.

Positive Factors

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.

Problem Areas

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.

Low ROE.

Limited Lows

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
image

Durable Competitive Advantage
Yes
image

Future Growth Drivers
Moderate.
image

Conservative Debt (long term debt < 3 Net Profit)
Yes
image

Debt Equity Ratio, Current Ratio
DER is Zero, Current Ratio is Average.
image

Return on Equity must be Above Average
No

image

Low CAPEX required to maintain current operations
Moderate

image

Management is holding / buying the stock
Yes
image

Price is Under Valued (< intrinsic value)
No
image

Stock Price is consolidating (now)
Yes
image

Stock Price is growing in past years along with EPS growth
Yes
image

Additional Futurecaps Checklist

Consolidated PE, PB Ratio
PE is high, PB is okay
image

Cash Flow Positive, Net Profit % greater than 8%
Yes
image

Paying Dividends, Tax
Yes
image

EPS Growth Rate
Good
image

Jump in Trailing Result EPS
Yes, But Moderate

image

Jump in Quarterly Result EPS
Yes, But Moderate

image

Expected Gain in 5 Years
2X
image

Price Movement Graph, 52 Week High & Low
Yes
image

Volume Analysis
Good
image

Power of Brand
Yes
image

Corporate Governance, Reputation of Leaders
Promoters selling holdings is an Issue in Past.
image

Fraud reported
Not in current search
image

Annual Report
Good
image

Summary

Based on the analysis, I would declare that the Stock definitely has Multibagger properties with expected 2-3X returns in next 5 years.

However, buying it at 30-50% discounts would add margin of safety.

image_thumb1

Subscribe

You can Subscribe to our Paid Service here.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: