WonderLa Expects Margin Contraction In Long Term Amid Spends On New Parks
Wonderla margins have already contracted due to the opening of the Bhubaneswar park and will further contract as the company gets ready to open another amusement park in Chennai.
Wonderla Holidays expects margin compression of up to 10% over the long term due to capital expenditure (capex) for the development of new amusement parks, the company’s Managing Director Arun K. Chittilappilly told NDTV Profit.
Wonderla Holidays posted a 1.7% year-on-year decline in revenue for the third quarter to Rs 122 crore, while profit fell sharply by 45.6% to 20.3 crore. Ebitda dropped by 32% to Rs 37 crore, and the margin also contracted to 30.6% from 44.1% in the year-ago period.
Talking to NDTV Profit, Chittilappilly said that margins may contract a bit further for the company in the coming quarters.
“Margins are a little hard to predict in our business because it depends completely on the footfalls we will be getting in a quarter. We have said that over the long term, our margins will contract a little bit, maybe 5% to 10%, because we are in a capex cycle,” Chittilappilly said.
The margins have already contracted due to the opening of the Bhubaneswar park and will further contract as the company gets ready to open another amusement park in Chennai.
“We are building new parks, and we have just opened one park in Bhubaneswar, and next year we will be opening our fifth park in Chennai. So there will be some margin contraction because of that,” the Wonderla MD said.
Over the next 10 years, the company is expected to grow around 15-20% in terms of its compound annual growth rate, Chuttilappilly said.
“We should be able to grow at a 15% CAGR. Whatever we have done in the last 10 years, we should be able to grow faster than that is what we are looking at,” he mentioned.
“If you look at our history, we have added three parks in 15 years, but now we are adding a park almost every other year. It will be hard to put a number on it, but I think a 15 to 20% growth is what we are looking at,” the MD added.
Shares of Wonderla Holidays Ltd. were trading 1.62% lower at Rs 705.90 apiece on the NSE as of 2:21 p.m., while the benchmark Nifty 50 gained 0.84% to close at Rs 23,149.75 points.
