Hello Folks,
I have exited the stock recently and would want to share brief update here:
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Firstly, Did not particularly like Q4FY24 results. The growth was flat v/s Q4FY23, but most importantly there was severe footfall degrowth, flat revenue was only due to very good ARPU increase. So, with recent hirings at top level and additional ESOP cost, EBITDA took a hit.
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Management in past 3-4 quarters have been stating that these are the best margins and best footfalls we have achieved. While they have confirmed further footfall growth, but they also said EBITDA% would drop a bit as these are at very high levels. Basic screening shows that footfalls were at highest in FY24 and Margins were at highest in FY23. So, there is no element of further upside surprise?
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Thirdly, the valuations were not cheap (As per my understanding). And earnings growth forecast has been reduced by the fact that they were at peak. So, it did not particularly gave me comfort to hold for longer.
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And because of all the above + good entry point of 200-220, i have kept a momentum based approach to exit stock if it falls and ride as it kept rising. Also, possibly starting of Odisha Park meant more stress in near term as costs will be front loaded. Hence, had kept tight stop and exited the stock when it hit my SL levels in June when actual NDA results came out.
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Q1FY25, kind of continued the negative footfalls. Banglore taking a -25% hit on footfalls and other parks too. Ex-odisha the results are -11% in revenue and -22.5% in EBITDA. And things will also not turn immediately given that Odisha park will also need to stabalize to contribute significantly to PAT.
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By the time Odisha Park starts contributing, we have Chennai Parks cost front loaded when it starts. Obviously, there will be surprise in form of new park announcement, but fundamentally things will look dull for FY25 atleast.
Hence, a combination of above was reason I exited the stock. However note that, the reason for my exit was that I had entered low and wanted to protect gains in case if market corrects a bit. And my choice of not going through temporary dull period (my expectation of FY25).
These are just my views which could go wrong, hope it helps!
Regards,
Mukul Jain
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