Wonderla Holidays Ltd IPO Review (Apply)

At last a main line IPO from Wonderla is breaking the ice for the fiscal 2014-15 after a very dull season in past few months with only SME IPOs and few debt offers making the bee line. No doubt, two IPOs planned their issue i.e. Maiam Global Foods and Loha Ispaat, but the first one got postponed before even road show starts and the other one failed to garner minimum subscription despite longer duration period and lowering of rates, indicating at no trust from retail masses at large. And this has happened when the secondary market has made historic highs in past few weeks. Amidst such scenario, the main IPO from Wonderla is coming in this month.

Wonderla that got SEBI node in April 2013 and wanted to hit the market around last Diwali is now coming out just before its SEBI card gets expired. The company is from the stable of V-Guard group and has a commendable performance in the stock market from the parent company. Now it is coming out with a maiden offer for its amusement arm called Wonderla Holiday Ltd (WHL).

The company has two amusement parks at Bengaluru and Kochi and now planning third part at Ranga Reddy District of Andhra Pradesh. WHL’s parks offer a wide range of water and land based attractions catering to all age groups.  It has 22 water based attractions and 33 land based attractions at Wonderla Kochi, situated on 93.17 acres of land and 20 water based attractions and 35 land based attractions at Wonderla Bangalore, situated on 81.75 acres of land. The company recorded total Footfalls of 23.40 lakhs in Fiscal 2013 and 17.50 lakhs in the nine month period ended December 31, 2013 across its two existing amusement parks in Kochi and Bangalore. Total Footfalls across the two amusement parks has grown at a CAGR of 7.42% from Fiscal 2011 to Fiscal 2013. WHL also has resort that is operated under the name, Wonderla Resort and, is a ‘Three Star’ leisure resort located beside its amusement park in Bangalore comprising of 84 luxury rooms, with amenities including banquet halls, a board room, conference rooms, a multi-cuisine restaurant, a solar heated swimming pool, recreation area, kids’ activity centre and a well equipped gym. Further, for setting up the proposed amusement park in Ranga Reddy District of Andhra Pradesh, it has acquired 49.57 acres of land. 

To part finance this expansion plan, the company is coming out with a maiden IPO of 14500000 equity share of Rs. 10 each via book building route with a price band of Rs. 115-125. Minimum application is to be made for 100 shares and in multiples thereof, thereafter. Issue opens for subscription on 21.04.14 and will close on 23.04.14. Post IPO, its existing equity of Rs. 42 crore will rise to Rs. 56.50 crore. Issue is lead managed by Edelweiss Financial Services Ltd and ICICI Securities Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. This issue is rated as “IPO Grade 4” by CRISIL indicating above average fundamentals of the company. Post allotment shares will be listed on BSE and NSE. During January 2008 to Mach 2008 the company allotted around 1.5 crore equity shares at a price of Rs. 12 per share. 

For past three fiscals, the company has posted an average EPS of Rs. 7.61. For first nine months of the fiscal 2013-14, it has earned net profit of Rs. 30.91 on a turnover of Rs. 121.53 crore translating in to annualized EPS of Rs. 9.81 on existing equity of Rs. 42 crore and at Rs. 7.30 on fully diluted equity of Rs. 56.50 crore post this IPO. Its NAV as on 31.12.13 is Rs. 36.29.  Thus the asking price is at a P/E of 17+ and at a P/BV of 3.44 on upper price band basis. For a while, company will have southern centric play in the field with next project being planned at Chennai. 

On merchant bankers’ front, Edelweiss had 20 mandates so far out of which 15 gave positive returns and 5 negative whereas ICICI Securities had 28 mandates out of which 15 gave positive returns and 13 negative.