My takeaways from Q2FY24 earnings call:
Revenue growth
Immediate growth is expected to be flattish. In long term, the mgmt expects to double the visitors in 8 years, which would be about 8-9% growth YoY. On top of this, ARPU growth is around 10%, which would give a sustainable revenue growth of about 15-20%.
Hyderabad had a slight degrowth. The mgmt mentioned that they will be focussing on being more aggressive for Hyderabad.
Expansion across regions should add more to topline.
Margins
Margins seem to have recovered back. EBITDA margin is at 55% and PAT margin is at 36%. There might be a slight dip going forward as the company implements more aggressive marketing and customer acquisition activities.
Capacity expansion
There are continuous capacity additions planned for existing parks, including new rides & attractions. Bangalore capacity is expected to go up in the next 1.5 years.
On new projects, 48 and 113 Cr is spent in Odisha and Chennai respectively. Odisha is expected to come live by June 24 and Chennai by Aug 25.
Just signed an MOU with Gujarat govt.
Talks are also going on for MP, UP and Punjab.
At current rate, one park will be added every 18 months going forward.
Key risks
- Natural disasters / pandemics etc.
- Accidents that would negatively impact the image (risk increases with increase in capacity)
- Economic slowdown (seems unlikely as of now)
Investment hyopothesis
- Trust worthy and investor friendly management
- Sustainable revenue growth of 20-30% can be expected as baseline
- Secular growth story as middle income group grows
- Margins would keep improving as more parks are added
- IMO, the scope of marketing is not yet tapped. So, need to watch their marketing activities and spend (google trend is slightly inching upwards). If it is unlocked, then they will be able to deal with lean periods more effectively.
Disc: Invested
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