Visit us at www.sharekhan.

com

December 03, 2015

Index
Stock Update >> Wonderla Holidays
Viewpoint >> Zee Learn

For Private Circulation only

REGISTRATION DETAILS Regd Add: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station,
Kanjurmarg (East), Mumbai 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos. BSE - INB/INF011073351 ; BSE- CD ; NSE - INB/
INF231073330 ; CD-INE231073330 ; MSEI - INB/INF261073333 ; CD-INE261073330 ; DP - NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004 ; PMSINP000000662 ; Mutual Fund-ARN 20669 ; Commodity trading through Sharekhan Commodities Pvt. Ltd.: MCX-10080 ; (MCX/TCM/CORP/0425) ; NCDEX00132 ; (NCDEX/TCM/CORP/0142) ; NCDEX SPOT-NCDEXSPOT/116/CO/11/20626 ; For any complaints email at igc@sharekhan.com ; Disclaimer: Client
should read the Risk Disclosure Document issued by SEBI & relevant exchanges and Dos & Donts by MCX & NCDEX and the T & C on www.sharekhan.com
before investing.

investors eye

stock update

Wonderla Holidays

Reco: Buy

Stock Update
Torrential rains in south India to affect footfalls in Q3; medium-term outlook intact
Company details
Price target:

Rs430

Market cap:

Rs2,062.3 cr

52 week high/low:

Rs404/242

NSE volume:
(no. of shares)

95,071

BSE code:

538268

NSE code:

WONDERLA

Sharekhan code:

WONDERLA

Free float:
(no. of shares)

1.64 cr

Shareholding pattern

CMP: Rs365

We had an interaction with the top management of Wonderla Holidays Ltd (WHL) to gauge
the effect of abnormal rain in south India on the footfalls in its amusement parks in Kochi
and Bengaluru. The management guided that rains will have an effect on the footfalls and
revenues but profitability is expected to remain stable in Q3FY2016. The amusement park
in Hyderabad is expected to clock revenue of Rs60 crore and OPM of 30% in first year of
operations, which will drive revenues and PAT in FY2017. We have revised down estimates
for FY2016 by 4%, while the same are broadly maintained for FY2017 and FY2018.
Key points
Torrential rain in south India to affect footfalls in Q3; profitability to sustain: The
sustained rainfall in south India will affect the footfalls of WHLs amusement parks in
Kochi and Bengaluru in Q3FY2016. Though Kochi has not received any rainfall, the
footfalls are likely to grow in mid-single digit as large number of schools from Tamil
Nadu will defer or cancel their visit plans to the amusement park. On the other hand,
the sustained rainfall in Bengaluru affected the visits from schools and corporates and
hence footfalls are likely to remain flat in Q3FY2016. The deferment in visit plans
might have some positive effect on the footfalls in Q4FY2016 (lean business quarter
for WHL). However, the management has indicated that the profitability wont be
affected much as higher sales realisation and better revenue mix, due to high nonticketing sales, would support OPM in Q3FY2016.
Hyderabad likely to clock revenues of Rs60 crore and OPM of 30% in FY2017: The
amusement park in Hyderabad will be operational from April 2016 and the management
expects the park to clock revenues in the range of Rs55-60 crore and expect sevenlakh footfalls in the first year of the operation (ie FY2017). With ticket pricing similar
to that of the amusement park in Bengaluru, the OPM is expected to be at 30% in
FY2017 and will go up to 40% in FY2018 (with 30-35% growth in the footfalls). We have
factored in Rs58-crore revenue for FY2017.
Reduce earnings estimates for FY2016; broadly maintained for FY2017 and FY2018:
We have reduced estimates for FY2016 by 4% to factor in muted footfalls in Q3FY2016,
while we have broadly maintained our earnings estimates for FY2017 and FY2018 as
footfalls in the amusement parks in Bengaluru and Kochi are expected to be stable in
Q1FY2017, and the launch of the amusement park in Hyderabad will add-on to revenues
and PAT in FY2017 and FY2018.

Price chart

Maintain Buy: WHL is a strong brand and offers value-for-money entertainment option
for the people in south India. The company is banking on more and more consumers
scouting for better weekend entertainment option. We expect the company to clock
double-digit growth in revenues and steady improvement in the OPM in a stable business
environment. We have maintained our Buy recommendation on the stock with a price
target of Rs430.
Valuations
Particulars
Price performance
(%)
Absolute

1m

3m

FY2014

FY2015

FY2016E

FY2017E

FY2018E

153.6

181.9

212.9

312.5

396.2

Operating profit (Rs cr)

70.3

80.6

91.5

126.0

175.5

OPM (%)

45.8

44.3

43.0

40.3

44.3

PAT (Rs cr)

39.9

50.6

56.1

74.1

99.6

EPS (Rs)
P/E (x)
EV/EBIDTA (x)
RoE (%)
RoCE (%)

7.1
51.7
29.3
29.5
37.7

9.0
40.7
23.2
20.0
27.6

9.9
36.7
22.6
15.6
22.0

13.1
27.8
16.0
19.3
27.4

17.6
20.7
11.2
22.8
32.8

Net sales (Rs cr)

6m 12m

9.8

29.6

36.2

20.9

Relative 11.8
to Sensex

27.0

43.4

30.0

Sharekhan

December 03, 2015

Home

Next

investors eye

viewpoint

Zee Learn
Viewpoint

Exit with a gain of 19%

CMP: Rs42.7

Key points
Earnings performance lagging our expectations: Our investment rationales on the stock of Zee Learn Ltd (ZLL)
were based on the possibilities of a sustainable turnaround and growth potential in the ZLL bottomline in the next
three years. However, looking at the recent quarterly performance, the numbers were way below our earlier
expectations. For Q2FY2016, though revenues were higher by 35% YoY to Rs30.7 crore, OPM was down by 460BPS
and net profit was down by 5% YoY to Rs1.08 crore.
Expect delay in earnings acceleration: Our investment rational was based on the managements four-point plans
to improve its bottom-line performance; (1) ZLLs investment in pre-school segment (70% of revenues, expect OPM
to improve to 40% in the next five years); (2) significant number of K-12 school properties are maturing (18% of
revenues, expect OPM to touch 23-25% in the next five years); (3) cost rationalisation in loss-making vocational
training segment (ZICA and ZIMA) and also lower emphasis on Brain Cafe (strategic JV with Gakken Education Co)
will see losses minimise in FY2016-17E. However, looking at the recent quarterly performance, we expect a delay
in the earnings acceleration for FY2016-17E.
Exit with 19% gains from our recommended price: We had initiated our value-point report on ZLL on July 7, 2014
with a positive view at a price level of Rs36. Given the delay in earnings acceleration and company lagging our
growth expectations. We recommend investors to exit from the stock at the current price level of Rs42.7 with a
gain of 19% from our initiation level.

Valuations
Particulars

FY2012

FY2013

FY2014

FY2015

61.0

100.8

121.3

127.8

OPM (%)

-35.7

-7.8

10.0

23.9

Net profit (Rs cr)

-27.5

-21.4

-1.9

9.9

EPS (Rs)

-0.9

-0.7

-0.1

0.3

PER (x)

0.0

0.0

0.0

126.2

P/BV (x)

8.9

10.4

5.6

5.2

EV/EBIDTA (x)

NM

NM

71.0

44.0

RoCE (%)

NM

NM

0.0

4.2

RoNW (%)

NM

NM

0.0

4.0

Net sales (Rs cr)

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

Sharekhan

December 03, 2015

Home

Next

Sharekhan Stock Ideas

Apollo Tyres
Ashok Leyland
Bajaj Auto
Gabriel India
HeroMotoCorp
M&M
Maruti Suzuki India
Rico Auto Industries
TVS Motor Company

Infrastructure / Real estate

Gayatri Projects
ITNL
IRB Infra
Jaiprakash Associates
Larsen & Toubro
Punj Lloyd

Automobiles

Oil & gas

Oil India
Reliance Ind
Selan Exploration Technology
Pharmaceuticals
Aurobindo Pharma
Cadila Healthcare
Cipla
Divi's Labs
Glenmark Pharmaceuticals
Ipca Laboratories
Lupin
Sun Pharmaceutical Industries
Torrent Pharma
Building materials
Grasim
Orient Paper and Industries
Shree Cement
The Ramco Cements
UltraTech Cement

Banks & Finance

Allahabad Bank
Andhra Bank
Axis (UTI) Bank
Bajaj Finserv
Bajaj Finance
Bank of Baroda
Bank of India
Capital First
Corp Bank
Federal Bank
HDFC
HDFC Bank
ICICI Bank
IDBI Bank
LIC Housing Finance
Punjab National Bank
PTC India Financial Services
SBI
Union Bank of India
Yes Bank
Consumer goods
Britannia Industries
GSK Consumers
Godrej Consumer Products
Hindustan Unilever
ITC
Jyothy Laboratories
Marico
Zydus Wellness
IT / IT services
Firstsource Solutions
HCL Technologies
Infosys
Persistent Systems
Tata Consultancy Services
Wipro
Capital goods / Power
Bharat Heavy Electricals
CESC
Crompton Greaves
Finolex Cables
Greaves Cotton
Kalpataru Power Transmission
PTC India
Skipper
Triveni Turbine
Thermax
V-Guard Industries
Va Tech Wabag

Discretionary consumption
Cox & Kings
Century Plyboards (India)
INOX Leisure
Info Edge (India)
KDDL
KKCL
Orbit Exports
Raymond
Relaxo Footwears
Speciality Restaurants
Thomas Cook (India)
Wonderla Holidays
Zee Entertainment Enterprises
Diversified / Miscellaneous
Aditya Birla Nuvo
Bajaj Holdings
Bharti Airtel
Bharat Electronics
Gateway Distriparks
Max India
Ratnamani Metals and Tubes
Supreme Industries
UPL

To know more about our products and services click here.

Disclaimer
This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This document may contain confidential and/or privileged material and is not for any type of circulation and any
review, retransmission, or any other use is strictly prohibited. This document is subject to changes without prior notice. This document does not constitute an offer to sell or solicitation for the purchase or sale of any financial instrument or as an official
confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report.
The information contained herein is obtained from publicly available data or other sources believed to be reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not be relied upon as such.
While we would endeavour to update the information herein on a reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (SHAREKHAN and affiliates) are under no obligation to update or keep the information
current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment
decision. Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The user assumes the entire risk of any use made of this information. Each recipient
of this document should make such investigations as he deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own
advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our views. Affiliates of SHAREKHAN may have issued other
reports that are inconsistent with and reach different conclusion from the information presented in this report.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject SHAREKHAN and affiliates to any registration or licencing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons
in whose possession this document may come are required to inform themselves of and to observe such restriction. Either SHAREKHAN or its affiliates or its directors or employees/representatives/clients or their relatives may have position(s), make market, act
as principal or engage in transactions of purchase or sell of securities, from time to time or may be materially interested in any of the securities or related securities referred to in this report and they may have used the information set forth herein before
publication. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates or any third party involved
in, or related to, computing or compiling the information have any liability for any damages of any kind. The analyst certifies that all of the views expressed in this document accurately reflect his or her personal views about the subject company or companies
and its or their securities and do not necessarily reflect those of SHAREKHAN. Further, no part of the analysts compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document.

Sharekhan

December 03, 2015

Home

Please refer the Risk Disclosure Document issued by SEBI and go through the Rights and Obligations and Dos and Donts issued by Stock Exchanges and Depositories before trading on the Stock Exchanges. Please refer disclaimer for Terms of Use.
Compliance Officer: Ms. Namita Amod Godbole; Tel: 022-6115000; e-mail: compliance@sharekhan.com Contact: myaccount@sharekhan.com

Next