Wonderla Holidays

Wonderla Holidays Q1 FY25 Analysis: Key takeaways!!

Wonderla Holidays faced some headwinds in Q1 FY25, with revenue declining 6% year-over-year to INR 172.9 crores. Footfalls decreased by 9% to 10.02 lakhs, primarily due to external factors like heatwaves, water shortages, and election-related disruptions. Despite these challenges, the company remains optimistic about future growth, particularly with the launch of its new park in Bhubaneswar and ongoing expansion plans.

Strategic Initiatives:

1. New park launch: Wonderla commenced operations at its fourth park in Bhubaneswar, spanning 50 acres and creating 450 new jobs.
2. Expansion plans: The company is progressing with its Chennai project, set to open in December 2025 or January 2026.
3. Future growth: Wonderla is in talks with various state governments for potential new parks in Indore, Mohali, Noida, and Ahmedabad.
4. Fundraising: The Board has approved exploring fundraising options to support projects for the next 7-8 years.

Trends and Themes:

1. Post-COVID normalization: The company observed some sluggishness in discretionary spending following three years of “revenge tourism” post-COVID.
2. ARPU growth: Average Revenue Per User (ARPU) increased by 3% year-over-year to INR 1,680, driven mainly by non-ticket revenue.
3. Expansion of SMB offerings: Wonderla introduced new theme dining experiences to cater to a diverse customer base.

Industry Tailwinds:

1. Recovery in travel and tourism sector
2. Growing middle-class disposable income in India
3. Increasing demand for experiential entertainment

Industry Headwinds:

1. Weather-related disruptions (heatwaves, heavy rains)
2. Water shortages affecting park operations
3. Election-related activities impacting footfalls

Analyst Concerns and Management Response:

1. Concern: Decline in footfalls, particularly in Bangalore
   Response: Management acknowledged the impact of external factors and is working to recover lost footfalls in the coming quarters.

2. Concern: Delay in Chennai project timeline
   Response: The company revised the opening date from June 2025 to December 2025 or January 2026.

3. Concern: Margin pressure due to new park launch
   Response: Management explained the impact of one-time expenses related to the Bhubaneswar park launch and ESOP costs on Q1 margins.

Competitive Landscape:
Wonderla positions itself as a comprehensive amusement park offering a better experience and higher-caliber rides at a lower cost compared to local competitors. The company’s mix of water park and amusement park attractions sets it apart in the market.

Guidance and Outlook:
Specific guidance was not provided, but the management expects to maintain historical EBITDA and PAT margin levels. They aim to recover lost footfalls in the coming quarters and potentially achieve slight improvement over the previous year’s numbers.

Capital Allocation Strategy:
Wonderla is exploring fundraising options to support its expansion plans, with a goal of adding five more parks over the next 6-7 years.

Opportunities & Risks:

Opportunities:

1. Expansion into new markets (Bhubaneswar, Chennai, and potential new locations)
2. Increasing non-ticket revenue through new offerings
3. Tapping into growing demand for domestic tourism

Risks:

1. Weather-related disruptions affecting park operations
2. Economic slowdowns impacting discretionary spending
3. Execution risks associated with rapid expansion

Regulatory Environment:
The company’s expansion plans involve negotiations with various state governments, indicating the importance of favorable regulatory environments for new park development.

Customer Sentiment:
The management’s focus on improving ARPU and introducing new experiences suggests efforts to enhance customer satisfaction and value perception.

Top 3 Takeaways:

1. Wonderla is aggressively expanding with new parks in Bhubaneswar and Chennai, plus plans for five more locations in the coming years.
2. Q1 FY25 performance was impacted by external factors, but the company remains optimistic about recovery and long-term growth.
3. The company is exploring fundraising options to support its ambitious expansion strategy over the next 7-8 years.