"Wonderla Surges 10% on TN Government Clearance for Chennai Project"

Wonderla Holidays (WHL) saw its shares reach a historic high of Rs. 887.70, surging by 10 percent on the Bombay Stock Exchange (BSE) during intraday trading on Wednesday. This remarkable rally followed the news that the company had received official clearance from the state government for its much-anticipated Chennai project. Notably, the stock surpassed its previous peak of Rs. 832.15, which was recorded on October 9, 2023. Over the past six weeks, WHL's stock has made an impressive 46 percent climb.

In an official exchange filing, Wonderla Holidays disclosed, "The company has successfully obtained all the necessary approvals/clearances/NOCs from the Government of Tamil Nadu for its Chennai Project and, thus, is poised to commence the construction of the Project."

The Chennai project entails the creation of an amusement park situated approximately 45 kilometers from Chennai, nestled along the Old Mahabalipuram Road. This endeavor will involve an investment of around Rs 400 crore and will encompass a sprawling 62-acre expanse located in Illalur village, within the Thiruporur taluk of Chengalpet district. The upcoming amusement park is set to enhance Wonderla Holidays' expansion plans, providing visitors with an exciting and enjoyable recreational experience.

Wonderla Holidays presently operates three Amusement Parks in addition to a Resort at Bangalore Park. The company had previously signed an agreement with the Government of Odisha, leasing 50.63 acres of land for the development of an amusement park project in Kumbarbasta Village, Khorda District, Bhubaneswar, Odisha, on June 29, 2022.

WHL's performance has showcased improvements in footfalls during the fiscal year 2023, fueled by pent-up demand post-pandemic and the implementation of various measures to attract visitors. These measures include focused marketing campaigns, thematic events, and new attractions. Furthermore, the company has managed to increase its Average Revenue Per User (ARPU) during both FY23 and Q1FY24, with a combination of ticket price adjustments and concentrated efforts to boost non-ticket revenues.

Rating agency Icra suggests that Wonderla Holidays, given its established position in the Indian amusement park industry and the ongoing strong demand in the market post-pandemic, is expected to maintain these improvements in the future. This is anticipated to result in healthy revenue and earnings growth. In addition to robust operating margins of 49.0 percent in FY23 and 63.3 percent in Q1FY24, the company's absence of debt (excluding lease liability and vehicle loans) and a substantial cash and liquid investments reserve of Rs 256.0 crore as of March 31, 2023, add further strength to its financial risk profile.

Despite having substantial capital expenditure plans in the near to medium term for the development of two forthcoming parks in Bhubaneswar (Odisha) and Chennai, Wonderla Holidays is expected to uphold its sound financial risk profile and comfortable capital structure. This will be supported by strong cash accruals and available liquidity, as highlighted in the rating agency's assessment.

This recent clearance for the Chennai project signifies an exciting development for Wonderla Holidays and reinforces the company's commitment to providing memorable experiences for visitors and expanding its presence in the amusement park industry.

BS