Wonderla Holidays Ltd Price band | 115 – 125 :ICICI Sec

Wonderla Holidays Ltd (Wonderla) is one of the leading amusement park
operators in India. The company commissioned its first amusement park
in Kochi in 2000 and the second in Bengaluru in 2005. Wonderla also
started a resort at its Bengaluru amusement park in March 2012. As part
of the expansion plan, the company is planning to open one more park at
Hyderabad, which is the objective of this IPO.

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--> Investment rationale
Well established player with early mover advantage
Wonderla has been present in the industry for the past 13 years with two
amusement parks. The company’s cost of establishment is lower than the
establishment costs in today’s market, which gives Wonderla flexibility to
keep entry fees competitive.
In-house manufacturing to help reduce capex and maintenance cost
Wonderla has developed an in-house manufacturing facility in Kochi to
construct rides used in its amusement park. According to the company,
the cost of in-house manufacturing a ride is almost a third of that of
buying it from outside. Manufacturing capability has also helped the
company to build its in-house maintenance capabilities, thereby reducing
the cost of maintenance and down-time for a ride.
Healthy operating cash flow with strong balance sheet
Wonderla has been able to generate operating cash flow at a CAGR of
~22% over FY09-13 due to strong footfall growth and healthy EBITDA
margin. Further, the business is a negative working capital business as
most payments are received upfront. The company has a D/E ratio of
0.15x, as on FY13, which reflects a strong balance sheet.
Concerns
• Ongoing litigation on land in Hyderabad
• Competition from existing and new players
• Risk of accidents or mishaps at any of the parks
• Slowdown in the overall economic environment
Priced at FY13 PE multiple of 19x on lower band and 20x on higher band
At the IPO price band of | 115-125, the stock is available at a multiple of
19-21x FY13E PE (post dilution).