First, we have to compliment Narayana Murthy, the visionary founder of Infosys, the Blue-chip behemoth, for his last stock pick, Swaraj Engines. I had earlier reported that Catamaran Management Services, his investment vehicle, had invested in 166,300 shares of Swaraj Engines in the March 2016 quarter. Rahul Arora of Nirmal Bang had provided an expert analysis of the stock and opined that it is a “great investment to be made” on account of its “high RoEs, high margins, strong management pedigree and reasonable valuations”.
Rahul Arora was perfectly correct in his opinion because in the last three months, Swaraj Engines has given a return of 34% which translates into a fabulous annualized return of 136%.
Now, Narayana Murthy’s visionary approach coupled with his brilliant business and investment acumen has led him to Wonderla Holidays, the small-cap company (Rs. 2257 crore) which is promoted by the respectable Chittilappilly family, the promoters of V-Guard. Wonderla Holidays runs amusement parks in various parts of the Country.
|Wonderla Holidays Ltd – Key Fundamentals|
|Market Cap||(Rs. cr)||2,246|
|EPS – TTM||(Rs.)||[*S]||10.59|
|Latest Dividend Date||17 Mar 2016|
|Book Value / Share||(Rs.)||[*S]||71.33|
[*C] Consolidated [*S] Standalone
|Wonderla Holidays Ltd – Financial Results|
|Particulars (Rs. cr)||Mar 2016||Mar 2015||% Chg|
(Source: Business Standard)
On Friday, 24th June 2016, when the entire World was cowering in fear due to Brexit, the veteran Billionaire made his way to Dalal Street and scooped up a chunk of 437,539 shares of Wonderla Holidays at Rs. 386.50 per share. Obviously, he did not even bat an eyelid when he handed over the purchase consideration of Rs. 16.91 crore to the bemused brokers. The investment is in the name of Catamaran Capital, Murthy’s investment vehicle.
It may be recalled that Prashant Jain, the whiz-kid fund manager with HDFC MF, was one of the first to recognize the potential of Wonderla Holidays. He had queued up at the counter on the very first day of its listing and scooped up a massive chunk of 10,00,000 shares at the throwaway price of Rs. 164 each. At the CMP of Rs. 400, fabulous gains of 150% are on the table.
To understand the potential of Wonderland Holidays and why it attracted a visionary like Narayana Murthy, we have to first turn to the expert analysis by Jatin Khemani’s Stalwart Advisors.
Jatin Khemani has opined that “Wonderla Holidays could be an amazing opportunity not just for next 3-4 years but for next decade or even longer”. As expected, he has given cogent facts and figures to support his proposition.
Next, we have to turn to the analysis conducted by Sharekhan and Axis Capital. Both stalwarts are also of the opinion that Wonderla makes a wonderful investment opportunity.
Arun Chittilappilly, Wonderla’s promoter, also oozed confidence about the Company’s prospects. “Amusement park industry has huge scope for growth in India” he asserted in his latest interview..
Chittilappilly added that “Amusement parks are a nascent industry in India, so there is definitely huge scope for growth … it’s definitely a very exciting time to be in this industry in India. There is growth potential in all the large cities.”
Arun K Chittilappilly, MD, Wonderla Holidays: Expect 20-25% revenue growth in FY17. pic.twitter.com/EVnk1kh908
— CNBC-TV18 News (@CNBCTV18News) June 27, 2016
We must bear in mind that, according to an article in Forbes published in 2014, Disney Land (which is owned by the Walt Disney Co) raked in $2.2 Billion (Rs. 14,300 crore) in profits from its various theme parks.
The massive profits being generated by Disney Land provides a hint as to the scale of the opportunity that is available.
If Wonderla Holidays is able to rake in even a tiny fraction of the profits that Walt Disney makes, Narayana Murthy will have another magnificent multi-bagger on his hands and we will have another opportunity to congratulate him for his stellar stock pick!