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Posts tagged ‘wonderla multibagger 2019’

28
Mar

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.

 

 

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Durable Competitive Advantage Moderate. image
Future Growth Drivers Moderate. image
Conservative Debt (long term debt < 3 Net Profit) Not. 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. Yes. image
Paying Dividends, Tax Yes, Yes image
EPS Growth Rate Okay. image
Jump in Trailing Result EPS Yes. But moderate.  
Jump in Quarterly Result EPS Yes. But moderate. image
Expected Gain in 5 Years 2-3X image
Price Movement Graph, 52 Week High & Low Okay image
Volume Analysis Okay. image
Power of Brand Good. image
Corporate Governance, Reputation of Leaders Okay. image
Fraud reported No. image
Celebrity Investors Yes 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.

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Note

Free Multibaggers are those with No Tracking & Updates.

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