Wonderla Holidays Limited (WONDERLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Wonderla Holidays Limited Q2 FY '24 Earnings Conference Call hosted by ICICI Securities. Please note that the duration of this call will be 30 minutes only. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay from ICICI Securities. Thank you, and over to you, sir.

Good morning, everyone. On behalf of ICICI Securities, I'd like to welcome everyone to the Q2 FY '24 Results Call of Wonderla Holidays Limited. Today, from the management, we have with us, as always, Mr. Arun Chittilappilly, the Managing Director; and Mr. Arun Sreenivasan, the DGM, Finance and Accounts. I now like to hand over the call to the management for their opening remarks. Over to you, sir. Thank you.

Hi. Good morning, everyone. Thank you, Adhidev. Good morning, everyone, and thank you for joining the call today on the joyous occasion of Dhanteras. On behalf of Wonderla Holidays, I would like to wish all of you happy Diwali and extend a warm welcome to all of you to discuss the Q2 and H1 FY '24 results. We started FY '24 on a strong note with great performance and scaling new heights in Q1. Our EBITDA, PAT were the highest since inception. I'm pleased to inform you that the growth trajectory continues for us. In Q2, we grew a remarkable 17% growth in our revenues, which stood at about INR 81 crores. This is a good achievement for us typically in Q2 because of the lower seasonality at this point. This shows the faith and enthusiasm of our visitors choosing Wonderla as the first-choice destination for thrill and adventures. Our strategies in digital marketing have been giving us remarkable results, enabling us to reach higher paying customers and with the relevant promotions and effective campaign. During the quarter, we undertook different marketing campaigns to highlight festivities and events [Technical Difficulty]

It seems that we have lost the connection for Mr. Arun. Please stay connected while we reconnect him. Thank you. Ladies and gentlemen, thank you for patiently holding. We have the line for the management reconnected.

Sorry about that. So as I was saying, I think we did a lot of digital marketing initiatives to enable us to reach our audience, and we did a lot of festivals and events like Independence Day, Chaturthi -- Ganesh Chaturthi, Onam, et cetera. So we had pretty good numbers during the quarter, especially during the festive season. The total footfall in our parks stood at 4.96 lakhs, 6% growth Y-o-Y. Bangalore park saw footfall of 2 lakh visitors, 2.07 lakh visitors; Kochi Park registered a footfall of 1.8 lakhs; and Hyderabad observed a footfall of 1.05 lakhs. Hyderabad is the only park which has shown a slight degrowth. But footfall for H1 stood at 15.9 lakhs versus 15.8 lakhs in H1 FY '23, registering footfall growth of only 1%. Park-wise footfall in the first half, Bangalore recorded a footfall of 6.7 lakh visitors, Kochi had about 5.03 lakh visitors and Hyderabad witnessed about 4.2 lakh visitors. With the improving weather and the festive season in Q3, we anticipate better footfalls in the coming quarter. We have implemented multiple strategies to spur growth in non-ticket revenues. Consequently, our ARPU in FY -- sorry, Q2 FY '24 increased by 9% and stood at about INR 1,440. ARPU for H1 FY '24 is at INR 1,568 registered a healthy 20% growth Y-o-Y. We endeavor to provide thrilling experiences to our visitors and are always looking at the innovative ways to ramp up mojo. So during the quarter, we launched 2 new attractions in Bangalore Park, Drop Loop and Rainbow Loooops. These are slides imported from a very prestigious manufacturer in Turkey. Our Hyderabad Park also won the Best Innovation Award for Mission Interstellar ride from Department of Tourism of Telangana government. The construction of our Odisha park is progressing at a good pace. I'm happy to announce that after receiving all the necessary approvals from Tamil Nadu government, we have commenced the construction of our park in Chennai. So we just about started doing preliminary work for like -- starting construction of our workshops, et cetera. We are also exploring opportunities to establish amusement parks in different parts [Technical Difficulty]

Mr. Arun your line is not audible. Ladies and gentlemen, we have again lost connection from Mr. Arun. Please stay connected while we reconnect him to the conference. Ladies and gentlemen, thank you for patiently holding. We have line for Mr. Arun reconnected on call.

Yes. So could you let me know where did you lose me? Did you lose me like -- did I move to the financial performance already?

Yes, sir, you can continue.

Yes, yes, yes. So I think -- so we've done an EBITDA of about INR 26.6 crores against '23, 15% growth. Then about 13% of PAT, which is a growth of about 28%. Now moving to half yearly. Our revenue for first half is about INR 271 crores versus INR 222 crores in the first half of FY '23, clocking a 22% growth. EBITDA is INR 149 crores and grown by 27% Y-o-Y and EBITDA margin stood at 65% and increased 200 basis points Y-o-Y. We have delivered a robust growth in profit after tax for H1 registering INR 98 crores versus INR 74.9 crores. The PAT margin is 36%, -- 200 bps growth. As we continue to be debt free, we can ensure the ability to make strategic investments and maintain high profitability. We thank you for your unwavering support and hope to deliver value to you in long term. With this, I conclude my speech and wishing all of you happy and prosperous Diwali once again. Now we can open for Q&A, please.

[Operator Instructions] First question is from the line of Jaiveer Shekhawat from AMBIT Capital.

So Arun, my question is in relation to the kind of expectation you have for footfall growth next year given that next year there won't be a high base. And any plans of expanding or adding more attraction at your existing parks to drive that footfall growth in FY '25?

Yes. So we should -- see this year, we are kind of coming back to kind of a normalcy kind of year for us. So that's why we didn't expect any footfall growth. So next year onwards, we are expecting footfall growth because we are introducing more attractions, like I already said, we've opened a couple of attractions in Hyderabad. We are adding 1 more attraction in Hyderabad before the end of this year. Bangalore is getting a very big attraction with about a INR 30 crore investment, which is like our virtual reality show, Mission Interstellar, which we already have in Hyderabad, we don't have it in our biggest park. So -- we are doing some of these investments, so you'll see the capacity of the park, especially Bangalore also will go up a little bit. One of the issues we have in Bangalore is capacity, especially during peak months. So we need a big new ride to kind of soak in more people. So that's why we are doing this. So yes, so like that, we are -- all 3 parks will see good investment this -- for the next 1, 1.5 years to kind of grow ourselves a little bit and be able to accommodate more people. So that's going to happen here. We'll be able to do -- we are expecting to get back to like a 5% to 6% growth in footfall per year kind of a thing, which is what we are looking for. It's unrealistic to expect more than that because -- sorry?

That's excluding Chennai and Odisha park...

Yes, yes. And yes, yes, it is excluding Chennai and Odisha. So it's unrealistic to expect more growth in Bangalore and what do you call it, Cochin, but we are kind of not happy with the performance of Hyderabad. We do feel there is more that we can unlock. Therefore, we are looking to see whether we can get a higher growth of footfall in Hyderabad. So that's something we're working on.

Sure. That's very helpful. And secondly, we heard about the bomb blast at the convention center in Kalamassery, Kochi. So was there any impact on footfalls in Kochi during the third quarter because of that?

We had an impact for about a week. I think a lot of groups, especially schools and colleges and all they were, I think, canceled for about a week, but they have come back since then. I think that has kind of -- that died very quickly. So not a long-term impact.

Sure. And also in your recent interview, you have mentioned about opening your Odisha park by June of '24. So could you talk about your pricing strategy there and your expectation of footfalls during FY '25 from the Odisha park?

See, our pricing strategy in Odisha still being evolved, but I think we should be able to price it about 30% lower -- 30% to 40% lower than our full parks, full-size park. So because of that, I think we should be able to get the decent footfall. Arun will be able to give you some -- what modeling we have done in terms of footfall for the first year? I'm not sure what the exact numbers are. Arun?

Yes. Sir, about 6 lakhs footfall is what we have tried to project...

6 lakhs, that's what I also thought.

In the first year, and as you said, 30% -- 70% of Bangalore will be the pricing that we have planned it. So we are expecting that to account in future.

Sure. And could you just...

So maybe we will -- to start off, we will be aggressive with pricing. So that depends on the marketing strategy that we take that, still not decided how we will do it. So it could fluctuate a little bit. Our pricing might be a little more aggressive in the beginning, like an opening period and things like that. Yes.

Sure. Sure. That's helpful. And could you just detail how much of CapEx on the Chennai and Odisha park has already been incurred until date?

Arun, you can just give an update.

Yes. So until date it is INR 48 crores for Odisha and INR 113 crores for Chennai. That's what we have until date.

And lastly, in terms of your discussion with various state governments....

Sorry to interrupt, Mr. Jaiveer, may we please request you to rejoin the queue as there are several participants waiting for their turn.

Sure, no worries.

Yes. Two questions, maximum please per...

Ladies and gentlemen, due to lack of time, we request the participants to restrict your questions to 1 per participant. Next question is from the line of Angad Katdare from Monarch Networth Capital.

Happy Diwali and congratulations on a good set of numbers. I have a small question. Just a follow-up on the previous participant. Regarding the Hyderabad footfall, can you just mention the reasons why we saw a slight degrowth or flat numbers compared to the other 2 parks?

Yes. So for us, Hyderabad is still evolving market, where our strategy needs to be a little more aggressive there. Whereas in Cochin and Bangalore, we are very well established already. Like we've been there for more than 15 years kind of thing, right? So I feel like our strategy needs to be a little different because we still feel our footfall -- like our retail footfall is not as high as it's in the other 2 parks. So we need to work a little bit more. So that's why I said that I'm hopeful that by next year, we should be able to change that trend.

Okay. And just 1 small question. Can you just provide the breakup of ticket and non-ticket ARPU and also for footfall walk-in and group ratio for Q2?

Yes. So for Q2, the group versus walk-in ratio is 31:69 versus 34:76 in the last quarter of FY '23. So there is more contribution from the group. So there is a 37% increase in the group contribution in Q2. And walk-in share has seen a degrowth of about 4%. And in terms of breakup, in terms of breakup of ARPU, INR 1,048 is the ATP and INR 392 is SPS, put together is INR 1,440. So SPS has seen a tremendous growth of 15%, and ATP has seen a tremendous growth of 7%, put together it's 9% growth over the last year.

Next question is from the line of Kaustubh Pawaskar from Sharekhan.

Sir, just a couple of questions. One, on the employee cost. This quarter the employee cost was higher. So any particular reason for it or...

Employee cost compared to June or is it compared to the last year?

Compared to last year.

Last year, the employee cost will go up because of several reasons because we have given increments. There are new roles added, new positions have been added in the current year. The management remuneration has increased. So that's why you are seeing a kind of increase there. Compared to Q2 -- Q1, we are down in fact. That is basically due to the commissions and profitability.

And one last one on the second half -- for the last year, we have seen a substantial increase in the footfall. So considering that this year -- considering the high base, should we assume flattish kind of footfalls or still you expect that there will be a low to mid-single-digit kind of a footfall growth?

See, this year we are not expecting growth in footfall to be very honest. We expect some minor growth here and there -- some seasons and all that, because last year, the base is so high, right? So -- and this year, things are mostly more -- everything has gone back to normal. So that effect will be there. But at the same time, it's not as bad as -- at some point, we thought we were not sure it will be -- it's not as bad, so it's pretty good. We're able to improve -- at least keep it in a steady state. This quarter, we should be able to grow a little bit more, I think, better because we have -- groups are also coming back this year in a much bigger way. But can't predict for the remainder of the year. And I feel next year onwards, we should be able to show some growth because, again, we are adding new rides. There'll be slightly more aggressive marketing, especially around launch of new rides and all that. So all that will create more buzz and we should be able to grow a little bit next year...

And any finalization of talks with any of the states where you expect to open a new park?

We'll keep -- we are talking to various state governments. I think we will be announcing something soon. Right now, nothing because in a lot of states are going into election and all that. So there's no update as such, but we will definitely -- I mean, we are meeting -- we have actually been talking to many state governments. So actively, we are talking to Madhya Pradesh. We are talking to Punjab. We're talking to Uttar Pradesh. We're talking to Gujarat. So these are the governments that we are talking to. As and when there is any update, we'll definitely keep you posted.

Next question is from the line of Devang Patel from Sameeksha Capital.

Sir, the ARPU growth Y-o-Y in Q1 was much stronger at 25%. In Q2, it is at 9%. So what is the outlook for ARPU growth this year? And on a related note, there is an ATP decline in all 3 parks sequentially. Is this part of seasonality and the mix change? Or you'd say you had to take a higher ticket price cut than you were expecting to encourage footfalls?

No, no. So this is in line with how we pace because Q2, for us, I said like Arun has already told you, we had a higher growth in groups and that's a seasonally weaker quarter for us. So sequentially, ARPU will decline because Q1 has high prices and Q2 lower prices and the growth of group footfall. So that's completely normal. So for us to get a 9%, 10% growth in our Q2 is actually pretty good ATP growth. So I think it's okay. Yes.

And for the rest of -- in the second half, roughly, this kind of growth in footfalls and ARPU one can expect to continue?

We should be able to start growing a little bit more during the next seasons and all. I think we'll see, I mean, hard to predict. But I think we should continue along this kind of a path, maybe flattish growth or slightly some -- you might see some bumps in footfalls here and there during -- but it is hard to predict because -- it's too early to say how the quarter will -- or the rest of the year will -- so yes, it's hard for us to give a number on it or anything, but we should do this way or slightly better than what we are doing so far.

Okay. Sir, and very quickly, the reason why the Bangalore Resort revenue and occupancy is down Y-o-Y?

So last year, this time, we had a lot of long-staying guests from large companies who were doing projects around expanding the like, for example, Toyota had taken a lot of rooms from us for months together. So that didn't happen this year because those kind of clients are not there. That's why you're seeing that drop. But our retail business actually grown. So it's not bad. And the revenues, I think we have roughly about 10% less, Arun, compared to last year?

For the quarter, we are about 15% to 16% down. But as we said, the long stays have only impacted. Last year, we sold about 1,438 rooms for long stay. This year, we have only 270 numbers. So long stays have impacted the occupancy as well as the revenues.

But the rest of it is -- we're okay with...

We have seen a double-digit growth in ARR, 21% growth in ARR.

Yes, yes.

Next question is from the line of Aditya Rathi from Aequitas Investments.

My first question is regarding the time line of both the parks that are coming up, Odisha and Chennai?

Yes.

Sir, time line regarding that? When do we think that it will be functional?

So I think next year, the next financial year, we will open Odisha. And the year after that, we'll open Chennai. So maybe June, July of '24 and same July, August of '25.

Okay. And sir, my last question is regarding the CapEx that we have already incurred on it. And CapEx that we'll incur on it.

Arun, can give an update on that?

Yes. So as I updated earlier, we spent about INR 48 crores out of INR 146 crores, which is allocated for Odisha. And for Chennai, the budget is INR 330 crores, out of which, we have spent INR 113 crores.

INR 130 crores?

INR 113 crores, 1-3 -- 1-1-3.

Okay, 1-1-3. And Chennai, we have incurred INR 48 crores out of what is the total plan?

Not Chennai. Odisha is INR 48 crores, Chennai is INR 113 crores.

There will be some revision in our cost, though.

There will be a revision in the cost also going forward. So these are the numbers as of now, yes -- INR 48 crores and INR 113 crores.

Mr. Aditya, does that answer your question?

Yes, yes.

Next question is from the line of [ Ankit Kanodia ] from [indiscernible].

Congratulations on a good set of numbers. Sir, my question is slightly long-term oriented as to -- how do we see this footfall going up, say, about 5 to 7 years down the line? I know it is hard to put a number, but when we look at the examples in the U.S. where we have so many parks like this and the kind of runway we see in the Indian economy where the consumption and the retail demand for having these kind of experiences. Is it okay to assume somewhere around, say, assuming that we have the capacity in our park, we can reach somewhere around any big number or any number you would like to share, say, 7, 8 years down -- 10 years down the line, footfalls?

See, right now, we're at 1, 1.2 million. By 7, 8 years, we should get closer to 2 million visitors. That's the goal. So it should grow, the footfall should grow in each park. But when you grow footfalls like that, the park also has to get bigger. So that is -- it's a chicken and egg, you have to do both. So that's why we are kind of embarking on a -- like expansion on our parks because that's what also drives more footfalls in the way because people need to have the right experience, right? And we should be able to accommodate more people.

Right, right, right. My second and the last question would be related to ARPU. So again, from a longer-term perspective, where do we see ARPU from there as more and more parks becomes...

ARPU, we should grow. I mean, I think it should grow inflation plus another 5% -- 5%, 6% on top of that also. So I think -- I mean, ARPU should grow because I think we have a multipronged approach to improve ARPU: one is to increase ticket prices; one is to improve non-ticket revenue, which is also actually going to be a bigger and bigger contributor of ARPU going forward. So I think that also should grow in double digits is what I think.

Ladies and gentlemen, we will take this as a last question for today. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for joining our Q2 conference call. Wishing all of you a very happy Diwali once again. And we hope to see you guys soon. Yes. Thank you so much.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.