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 | |||
| Parameter | Values | ||
| Market Cap | (Rs. cr) | 2,246 | |
| EPS – TTM | (Rs.) | [*S] | 10.59 |
| P/E Ratio | (X) | [*S] | 37.54 |
| Face Value | (Rs.) | 10 | |
| Latest Dividend | (%) | 15.00 | |
| Latest Dividend Date | 17 Mar 2016 | ||
| Dividend Yield | (%) | 0.52 | |
| Book Value / Share | (Rs.) | [*S] | 71.33 |
| P/B Ratio | (Rs.) | [*S] | 5.57 |
[*C] Consolidated [*S] Standalone
| Wonderla Holidays Ltd – Financial Results | |||
| Particulars (Rs. cr) | Mar 2016 | Mar 2015 | % Chg |
| Net Sales | 44.5 | 36.46 | 22.05 |
| Other Income | 2.38 | 2.89 | -17.65 |
| Total Income | 46.88 | 39.35 | 19.14 |
| Total Expenses | 33.5 | 26.27 | 27.52 |
| Operating Profit | 13.38 | 13.08 | 2.29 |
| Net Profit | 7.57 | 6.59 | 14.87 |
| Equity Capital | 56.5 | 56.5 | – |
(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.
It may be recalled that Jatin Khemani has earlier given us two stock picks, Amrutanjan and Tasty Bite Eatables, both of which have turned out to be blockbuster winners.
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!
Great News , was thinking to buy , Just boosted my confidence.
Was going through AR of Bajaj Corp , Our favorite Ashish Kacholia holds a big chunk in the company 🙂
Company fundamentals are sound and the industry no doubt holds promise over the long term but I wont get in for the simple reason that the PE is already high at 36. Neither is it attractive in terms of the Price to Sales which is extremely high at 11. The Graham Number is a mere 133 whilst the stock is priced at 386. At around 260-280 range I probably could turn a buyer. Till such a correction occurs I will be a watcher!
Agree with you fully – its highly priced due to the hype created. It will be a slow mover, not a multi-bagger. Apart from high P/E, P/B, see the growth in OPM is a mere 2% despite topline growing 22%. Also, it is a seasonal industry, more focused on holiday times and weekends, and non-monsoon periods mainly.
Murthy has a lot of money, does not know what to do with it! Instead of investing in these (well, he may make some returns, but he wont be remembered for that alone!), he could have invested in some 100 techies with seed fund of Rs 10 lakhs each (total 10 crores)! He would have become a true Enterprising Wizard!
ya it does not seems such an attractive buy to me as well. there are better opportunities in the market
#Niveza #Review ::
Wonderla Holidays is a V Guard group company and operates amusement park. IT has India’s largest amusement park. It operates 2 amusement parks in Bangalore and Kochi. The growth of the business is very consistent and at over 20% rate. Company is also improving its margins gradually. The balance sheet of the company is also clean with very less debt. Since this industry is consistent and on a growth, investors can buy such stock on every decline and hold for a long term.
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Waited for some correction to enter…. It has finally fallen. Still on my watchlist.