Chennai Park Opening And Digital Efficiency Will Unlock Leisure Trends

Key Takeaways

• Expansion into new geographies and ancillary offerings is set to boost growth, diversify revenue streams, and reduce reliance on mature parks.
  
• Operational efficiencies and favorable government support position the company for sustainable, long-term gains in footfall and earnings across markets.
  
• Limited innovation, mature park stagnation, geographic concentration, and heavy expansion spending pose risks to revenue growth, margins, and long-term profitability.

Catalysts

Operates amusement parks and resorts in India.

• The scheduled opening of the new Chennai park in FY26, combined with ongoing advanced-stage negotiations for additional parks in North India, is set to expand Wonderla's footprint beyond Southern India, directly capitalizing on rising urbanization and expanding middle-class discretionary spending-this should drive significant revenue and earnings growth as new parks ramp up.
  
• Strong growth in non-ticket revenues (up 11% YoY) and positive initial response to the premium 'Isle' resort demonstrate effective diversification into hospitality and experience-driven ancillary offerings, supported by the growing consumer preference for immersive leisure-this will help offset flattish mature park footfalls, improving per-capita earnings and overall revenue stability.
  
• Accelerated adoption of digital bookings and dynamic pricing is increasing operational efficiency, with online bookings up and a 6% YoY ARPU increase in Q1, supporting higher net margins and enhanced earnings resilience as costs are optimized and value extracted from existing customers.
  
• Increased government recognition of amusement parks as vital tourism infrastructure, easier access to land, and ongoing improvements in domestic travel connectivity align with long-term tourism growth policies, setting up a foundation for sustainable increases in future footfalls and revenue across new and existing parks.
  
• The successful stabilization and quick EBITDA breakeven of the new Bhubaneshwar park in a Tier 2 market highlights Wonderla's ability to capture growing domestic tourism trends and replicate its business model in untapped cities, de-risking regional concentration and driving the next leg of top-line and earnings growth.

Wonderla Holidays Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Wonderla Holidays's revenue will grow by 24.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 21.7% today to 23.5% in 3 years time.
• Analysts expect earnings to reach ₹2.0 billion (and earnings per share of ₹30.48) by about September 2028, up from ₹986.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 49.4x on those 2028 earnings, up from 41.5x today. This future PE is greater than the current PE for the IN Hospitality industry at 37.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 17.74%, as per the Simply Wall St company report.

Wonderla Holidays Future Earnings Per Share Growth

Risks

• The company acknowledged a decline in footfall at mature parks and expects only low single-digit footfall growth from its existing parks, indicating that demand in established locations may be saturating, which could limit core revenue growth over the long term.
  
• Wonderla's capital-intensive expansion (Chennai Park and potential new locations) requires substantial upfront investments and is likely to put sustained pressure on margins and earnings until new parks become operational and ramp up to maturity.
  
• Short-term fluctuations cited (unseasonal weather, dip in consumer sentiment, and localized events) highlight inherent business volatility, and there is an overdependence on regional factors, exposing Wonderla to geographic concentration risk that could impact both revenues and net margins.
  
• Management revealed no significant innovation or frequent refresh of offerings in mature parks, and ARPU growth is being prioritized over volume, suggesting potential customer fatigue and declining repeat visitation, thereby risking same-park revenue stability.
  
• Rising marketing and operating expenses, driven by inflationary pressures and promotional campaigns for new projects, have already contributed to declining EBITDA and place further strain on near-term and possibly long-term profitability.

Valuation

• The analysts have a consensus price target of ₹804.0 for Wonderla Holidays based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹1000.0, and the most bearish reporting a price target of just ₹662.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹8.7 billion, earnings will come to ₹2.0 billion, and it would be trading on a PE ratio of 49.4x, assuming you use a discount rate of 17.7%.
• Given the current share price of ₹645.65, the analyst price target of ₹804.0 is 19.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.