Wonderla Holidays IPO-Crisil rates 4/5-You should invest
Wonderla Holidays IPO would open on 21st April, 2014 for subscription. This Bangalore based Wonderla Holidays is planning to raise Rs 190 Crores through this IPO. This company revenues are growing at CAGR of 22% in last 5 years. Crisil rates this IPO as 4/5. Is Wonderla Holidays IPO is good for investment? How does split of Andhra Pradesh State into two states would impact this Wonderla Holidays performance?
About Wonderla Holidays Limited
Wonderla Holidays Limited is a Bangalore based Amusement Park operator. Currently it owns and operates two amusement parks, one in Kochi and other in Bangalore. It also owns and operates a resort beside its Bangalore Amusement Park. Currently it is planning to expand its operations by setting up Wonderla amusement park in Hyderabad.
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Issue details of Wonderla Holidays IPO
- IPO opens: 21-April-2014
- IPO closes: 23-Apriil-2014
- Face value: Rs 10 per share
- Issue price band: Rs 115-Rs 125 per share (Includes premium of Rs 105-Rs 115 per share)
- Minimum bid: 100 shares
- Minimum investment: Rs 11,500-Rs 12,500
- Listing: BSE and NSE
- Lead Managers: ICICI Securities and Edelweiss Financial Services
Download Wonderla Holidays IPO Prospectus from this SEBI link
Purpose of the IPO: The funds would be used for the following purposes.
- To set up an amusement park, Wonderla Hyderabad
- General Corporate purpose
Company Financials
- The company has posted revenue of Rs 6,330 Lakhs for the year ended Mar-2009 and Rs 13,917 Lakhs for the year ended Mar-2013. First 9 months of this financial (FY 2013-14) it year made a revenue of Rs 12,152 Lakhs.
- The company has posted a profit of Rs 1,103 Lakhs for the year ended Mar-09 Vs profit of Rs 3,348 Lakhs for the year ended Mar-2013. First 9 months of this financial year (FY 2013-14) it made a profit of Rs 3,099 Lakhs.
Reasons to invest Wonderla Holidays IPO
- Good revenue growth in last 5 years. Revenues increased from 6,330 Lakhs for the year ended Mar-2009 and Rs 13,917 Lakhs for the year ended Mar-2013 at CAGR of 22%. If we expect 9 months performance to repeat for this quarter too, this year, revenue estimate would be at Rs 16,200 Lakhs (approx)
- Good profit growth from Rs 1,103 Lakhs for the year ended Mar-09 Vs profit of Rs 3,348 Lakhs for the year ended Mar-2013. The profitability for 9 months is at 25% margins, which is good.
- Crisil rated this IPO as 4/5 (4 out of 5) which indicates fundamentals are above average.
Reasons not to invest in Wonderla Holidays IPO
- The company is in 2 litigations pertaining to 14.7 Acrores of Land connected with Wonderla, Hyderabad. If determined against the company, it can impact the performance.
- Accident mishaps at amusement parks can expose financial liabilities.
- Wonderla, Hyderabad is expected to start its operations after 20 months, any delay could impact its performance.
- Due to the reconstitution of Andhra Pradesh State, Wonderla, Hyderabad would be part of the State of Telangana and any political issues in the future can affect the revenue and profits of the company.
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Recommendation / Investment strategy:
- Average EPS of Wonderla Holidays for the last 3 years is Rs 7.61 and last financial year ended Mar-2013 is Rs 7.97. Based on last 3 years average EPS of Rs 7.61 and issue price of Rs 115 – Rs 125, the P/E ratio works out to be 15 to 16. Similarly, based on last financial year EPS of Rs 7.97, P/E ratio works out to be 14 to 16. There is no listed company to compare the issue price, hence we cannot comment on whether the share price is overpriced or underpriced.
- The company is generating good revenue and profits and growing at a faster pace. The margins are also good at 25% of revenues. Considering risks indicated above, I would still bet and suggest investors to invest in this IPO.
- Though I am not able to comment on issue price, considering the growth prospects and consistent performance, I would personally like to invest in this Wonderla Holidays Initial Public Offering.
Check Wonderla Holidays Allotment status on this link
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Suresh
Wonderla Holidays IPO
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Hi,
When this IPO will be listed and shares allocated to the applicants? How/where to check the progress of an IPO, whether it is under-subscribed or over-subscribed, etc.?
Thanks much.
Sri, It would take 20-30 days for shares to be alloted. You can check the IPO section from the demat account login where you applied. e.g. ICICI direct.com –> IPO —> It shows alloted, not alloted etc., It is subscribed 98% on 2nd day. We need to wait for 1 more day to know whether it is over subscribed or not. This info can be seen in news websites like moneycontrol.com, Economictimes etc.
There is a Sayinbg that " Never Invest in IPO". What is your view on this? What will happen to financials if Hyderabad Park is delayed further?
Hi Karthik, I already indicated in “Negative” points that in case there is delay in project, company would incurr cost, but no revenue. Hence it impacts the profits of the company.
Hello Suresh,
Thank you for the analysis. I've a demat account in Geojit and I've contacted them about investing into this IPO, but they said like after investing the management of Wonderla will decide whether to allocate the share to an individual or not. How exactly it will work? Will there be any criteria in allocating the shares? Since I'm novice to market I want to invest only minimum entry amount, will they consider only the investores who invested in huge amounts?
Please let me know how it's gonna work.
Thank you
Kishore
Kishore, Management would decide to which group they would allot. e.g. if any one applied for 100 shares @ Rs 125 (maximum price in the band) and issue is oversubscribed by say 2 times, means they would allot 50 shares proportaionately and refund you for balance 50 shares price. Like this they would take call for group of shares applied by investor. e.g. it is subscribed by 1.5 times, they can take call that any person applied for 4 shares, they would allot 3 shares (applied 100, you would get 75 only). There could be several such decision which would be taken by the company
Dear Sir,
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Krishna.
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Thanks for the recommendations. Question… When you apply for an IPO, it prompts me to enter 3 bids. What price we need to enter? How it is related to the allotment of shares? I have some idea. But I want to make sure what I am thinking is correct. Can you brief?
Sri, For IPO’s where you need to bid, you need to keep a bid price of 3 of your choice. means for this share price range of Rs 115 to Rs 125, you can apply for 100 shares at Rs 115, 100 shares of Rs 120 and 100 shares at Rs 125. Now when there is maximum bids at Rs 125, your other bids of Rs 115 and Rs 120 would bed returned back to you (100+100 shares applied by you at this rate). You would be alloted 100 shares at Rs 125. Now in case there are maximum bids at Rs 115, they they would allot at Rs 115. However how many shares they would allot to you depends on the subscription which would be based on proporationate calculation.
Thanks. I thought the same.