Stock To Buy: Smallcap Company Reports 27% Revenue Growth, Buy Stock For High Return: ICICI Direct

Reputed brokerage firm ICICI Direct has recommended investors to buy the stock of Wonderla Holidays, for high short-term returns.

Stock To Buy: Target Price

The Current Market Price (CMP) of Wonderla Holidays is Rs. 363. ICICI Direct has estimated a Target Price for the stock at Rs. 430. This stock has the potential to give an 18% return, in the upcoming 1 year. It is a small-cap stock with a market capitalization of around Rs. 2,125 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 363
Target Price	Rs. 430
Potential 1 year return	18.00%
52 week high share price	Rs. 390.35
52 week low share price	Rs. 196.65

Financial Result

Wonderla Holidays reported strong results in Q1FY23 with revenues surpassing pre-Covid levels by 27% to Rs. 149.4 crore. Further, controlled other expenses also helped the company to achieve EBITDA margin of 61.3%, which was 300 bps higher than the pre-Covid level. Key drivers for growth were footfalls that were at 1.1 million (mn), that is 124.4% of pre-Covid levels) while average total revenue per footfalls was up 2.1% vs. pre-Covid to Rs. 1336.

Why Should You Buy This Stock: ICICI Direct

According to ICICI Direct, The company is likely to witness healthy traction in footfalls in FY23 after a two-year gap. With a leaner cost structure and healthy b/s, it is now in a strong position to expand its footprints in other regions. We remain positive on the company and maintain our Buy rating, and value the company at Rs. 430, that is 21x FY24E P/E."

"Incorporating a strong Q1 performance, we expect revenue and EBITDA CAGR of 74% and 203%, respectively, for FY22-24E. The company has a debt free balance sheet along with net cash/liquid investments of ~Rs. 170 crore as of June 2022 that will take care of its expansion plans, going ahead," the brokerage firm added.

Project Expansion

The company has recently signed an agreement with the Odisha government for the development of an amusement park in Bhubaneshwar for which it has signed a 90-year lease on 50.63 acres of land, which will entail total capex of | 130 crore over 24-30 months. This will be funded via internal accruals. The management estimates ticket pricing for Odisha Park to be ~60% of existing parks. Further, the company remains confident of a resolution of the local body tax issue in Chennai for the project to take off, the firm informs.

Company Portfolio

Wonderla Holidays is engaged in the business of amusement parks and resorts. It has three operational parks, one each in Kochi, Bengaluru and Hyderabad that were established in 2000, 2005 and 2016, respectively. The Bengaluru park also has a resort with four banquet halls and 84 rooms. The park business is seasonal in nature with higher footfalls in June and December quarters corresponding to summer break and festive season, respectively.

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.