I would like to add a few points which could be useful to readers here:
-
An increase in ATP will mostly flow to the bottom line. As costs are somewhat semi-fixed. Now, with inflation both ticket prices and costs will increase but just imagine who could afford to spend 2k-3k/day on a full-day adventure? Especially when other adventure costs are growing crazy and there is a rise in per capita income.
-
F&B offerings will experience higher income along with a higher proportion. As footfalls increase, the increase in number of restaurants will be at a lesser pace. Also, if space is given for rent then the company can easily charge higher rent.
-
There are optionalities in terms of how many agreements they do in the asset-light model. Goa, Gujarat, MP, etc. all are ready to give out leased land. Imagine, Odisha took 100cr. to build a park with potential footfall of 5-6lkh i.e. on 800/ticket it goes to 40-48cr. Now tweak the assumption and add F&B offerings. Give comfortable margins as well here. Even if 30% OPM is achieved in Odisha it can generate decent ROI.
-
Chennai Park has very high CAPEX and I think this could only be a concern as ROI will be lower for years. So, temporarily (maybe 2 years) we have to face the pain of worsening return rations.
For years, the company had only 3 parks. Now it will soon have 5. If at all the pace of park addition continues this itself will be a trigger for sustaining valuation either at current levels or slightly higher valuations from here. (I have no comment on valuation as it is always subjective).
Hope it helps.
Invested at lower levels and hence following momentum-based approach to protect gains, so might not remain invested if price falls!
Regards,
Mukul Jain
Subscribe To Our Free Newsletter |