Wonderla Holidays Limited (WONDERLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Wonderla Holidays Limited Q1 FY '26 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Khanna. Thank you, and over to you, sir.

Yes. Thank you, operator. Good afternoon, everyone. On behalf of AMBIT Capital, I would like to welcome you all to the Q1 FY '26 Earnings Conference Call for Wonderla Holidays Limited. From the management, we have with us Mr. Arun Chittilappilly, Managing Director; Mr. Saji Louiz, CFO of the company. We would like to now begin the call with opening remarks from the management, post which we will have the forum open for an interactive question-and-answer session. Thank you, and over to you, Arun and Saji.

For your patience. We have the line for management connected.

Thank you, and over to you, sir. Thank you, everyone. On behalf of Wonderla Holidays, I'm delighted to welcome all of you to the Q1 FY '25 financial results. Joining me today are our CFO, Mr. Saji and our COO, Mr. Dheeran Choudhary I trust you had the chance to review our results and the accompanying investor presentation. FY '25 was a milestone year for us. We celebrated 25 years of successful operations. What began as a simple yet powerful vision to bring happiness to people through world-class amusement experiences has evolved into an inspiring journey. We have entered FY '26 on a celebratory note, commemorating this legacy with the festive activities in our Kochi Park. Even though the market environment was challenging, we have witnessed a robust start to the year with April footfalls were growing in double digits, supported by our summer team campaigns. These campaigns stuck accord with the families, allowing us to welcome 9.17 lakh visitors across our parks during the quarter. During the second half of the quarter, we saw a decline in consumer sentiment owing to external factors. such as an early monsoon, and we are yet to -- yet we were able to sustain a flattish footfall compared to -- sorry, flattish revenue compared to last year. During the quarter, we saw a positive shift in consumer behavior. Online bookings have continued to grow rapidly, and this reflects the success of our integrated digital marketing strategy. Combined with our operational excellence and enhanced guest experience, this helped deliver a 6% year-on-year rise in ARPU in Q1, reinforcing the strong value that we offer. Another highlight of the quarter was the launch of Isle by Wonderla, a boutique luxury resort experience joining our Bengaluru park, spread across 4.5 acres, 39 key resorts features private pool cottages, glamping tents, hammock Suites and nature-inspired offerings, built with an investment of approximately INR 39 crores, Isle reflects our vision of blending hospitality with entertainment, and it's aligned both with global leisure trends and evolving [ travel ] preferences in India. The initial response to Isle has been above expectations, and we hope that this continues to contribute as a complementary experience to our amusement parks. Our non-ticket segment also continues to perform well, driving double-digit growth in sales per head. We continue to double down on our product offerings and guest experience leading to this healthy growth. As an outcome of this -- our customer NPS in Q1 also has shown promising growth. Construction of our fifth park in Chennai is progressing rapidly, and we remain on schedule to commence operations by December 2025. Looking forward, we are confident that our focus on innovation gets delayed and strategic expansion will continue to drive our sustainable growth. With that, I conclude my remarks and hand over to Saji, our CFO, for detailed analysis of financial performance. Over to you, Saji.

Thank you, Arun. Good afternoon, everyone, and thank you for joining us for the Q1 FY '26 earnings call. Let me cover the key aspects of the results. Our revenue from operations marginally declined by 3% on a Y-o-Y basis for the quarter and stood at 169 crores. EBITDA, including other income for the quarter stood at INR 87.51 crores, registering a decline of 9% Y-o-Y basis. EBITDA margin for the quarter stood at 48.9%. Our profit after tax for the quarter stood approximately at INR 52.58 crores and PAT margins remained at 29.4%. So the major reasons for EBITDA reduction, which is INR 14 crores without considering other income are as follows: Reduction in our footfall contributed roughly 31% of the EBITDA reduction. The incremental marketing expenditure attributes 45% of the EBITDA reduction and net of all other expenses resulted in a balance 23% reduction in our EBITDA. Additionally, we have generated INR 6 crores of other income in this quarter, mainly attributable to interest income on fixed deposits and gains from our investments. Moving on to the Park-wise footfall numbers. In Q1 FY '26, footfall for Bengaluru stood at INR 3.22 lakhs, Kochi at INR 2.37 lakh, Hyderabad at INR 2.62 lakhs and Bhubaneshwar stands at INR 96,000. The average ticket price for the quarter stood at INR 1,281 with a 4% increase on Y-o-Y basis. The average non-ticket price is INR 493, an increase of 11 percentage on Y-o-Y and average revenue per user, ARPU stood at INR 1,775 for the quarter with 6% increase on Y-o-Y basis. With this, we can open the floor for Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Jay [ Chauhan ] [indiscernible] Asset Managers.

I have 3 questions. One is given the glamping and boutique [indiscernible] of Isle, I wonder are you observing a faster occupancy ramp-up compared to traditional [indiscernible] properties? I mean like the response and booking momentum compared to expectation of new hospitality assets compared to hospitality industry?

Sorry, can you please repeat the question?

Yes, sir. So basically, I was asking, are you observing a faster occupancy ramp-up compared to traditional [indiscernible] properties because I guess it has been almost a month, right, you started operations at Isle.

Yes, it's doing well, better than what we thought. So I think definitely, there is a demand for a differentiated premium offering. So that's what we feel, yes.

Right, sir. And sir, do you exclusively offer bundled packages only? Or do you also sell stand-alone room nights, individual and F&B offerings at Both. So like what has been the guest preference in that so far between bundled and unbundled options?

We don't know yet. I mean, it's still early days, but I think some people take -- with the park. Some people may not take with the park also, yes.

Right. Got it, sir. So one final question that I have is within the average of non-ticket price spend per head, like could you please provide a breakup between F&B, merchant and any other revenue streams like if the F&B -- I think F&B will be the dominant contributor, right?

Yes, F&B is the dominant contributor.

And do you have any other ancillary revenue stream for the same for non-ticket price, average non-ticket price?

No, no, no. This is it. We have F&B, retail and then resorts that comes under non-ticket revenue for us.

[Operator Instructions] The next question is from the line of Navin from ithought PMS.

Congratulations on completing 25 years huge milestone for the team. I hope I'm audible. Yes. So again, this is just like a very broad-based forward-looking session because a couple of quarters ago, I remember other analysts asking questions about future parks and you guys mentioned that you were in discussions with garments, right? So any movement on that front? So is there anyone new -- any place that you're considering?

We've not been able to finalize anything yet. These are -- we have 2 locations where we have advanced stage of discussions going on. Once we have a closure, we will definitely announce it.

Got it. Got it. Just one more question. So regarding the concerts, right? So I just wanted to know which line item that revenue falls into. So would it be.

Non-ticket.

And like has that improved in share of contribution compared to like retail resorts, SMB, stuff like that? Or is it still a very small part of non-ticket?

No, it's very small. It's very small. And we usually -- I mean, we are not looking that as a primary revenue driver even from non-ticketing. It's more of a marketing-related spend that we do. Of course, we do get some ticketing revenue. I'll ask Dheeran to just explain that a little bit more.

Thanks, Arun. So like Arun said, it's not a core revenue driver. We look at this as a marketing initiative to kind of build Wonderla as an overall entertainment brand. And a lot of these are partnerships that we do with the larger concert organizers out there.

The next question is from the line of [ Shamit ] from AMBIT Capital.

So congrats to the team on completing 25 years. So could you talk about the difficulties you faced initially and how the overall amusement park landscape in India has changed over the last 2 decades and how Wonderla has evolved, which gives you the confidence to increase more parks by the end of this decade?

I think the main hurdle that we still face even to this day that the industry is not really recognized as an industry yet, even though in other countries, it's a very -- especially developed countries, it's a thriving industry. So the main issue is land acquisition, government clearances and getting the rights -- quality rights at a decent price, whether you make it or import it. So these are the main challenges. Those challenges continue to remain in some ways, but a lot of those have been mitigated because we are also now vertically integrated, especially for the rides, et cetera. So these are some of the challenges. But I think that the changes now that we see is that I think a lot of governments, especially tourism-friendly states have recognized the need for amusement parks in their states, especially in the larger cities. So that has helped us to negotiate directly with the government to set up projects and secure land at very reasonable prices. So some of those positives are also there. But a lot of the challenges also remain. This -- this industry by its very nature is a very complex industry. It's a very engineering heavy maintenance heavy safety heavy industry. So it's not something that can be easily tackled. So it takes a lot of operational rigor to have mastery in the segment.

Got it. And even recently, the CM of Haryana announced plans to bring Disneyland to India in a few years. So how are you looking at this development? And post your commissioning of the Chennai park, how aggressively are you looking to scale up your operations, especially in the northern belt?

See, Disneyland is not coming to India anytime soon. I'm sure different chief ministers will keep announcing it, but I don't see them coming to India anytime in the future because near future, at least for the next 5, 10 years because -- simply because the investment required is massive. It's like when we spend INR 500 crores to INR 700 crores for a park, Disney Park will cost anywhere between $3 billion to $7 billion per park. So that kind of investment will not be financially viable for a country like India. So I don't see that happening. But I think there is definitely scope for smaller like players like Wonderla to expand into other geographies. And we are negotiating even with Haryana government, for example, to see whether we can set up somewhere or something in the NCR region. So -- and we are also talking to Uttar Pradesh for Noida. So whoever gives us a better deal and where we feel it's more suitable, we will go with that. Talks are not yet -- it's not over, so we can't comment more on this. But I think definitely, for us, we feel that there is definitely a scope to expand into other cities, especially the larger cities, capital -- state capital cities, et cetera.

Got it. And you witnessed good response from the newly launched Odisha park. However, for the mature parks, which are Bengaluru, Kochi, Hyderabad, there has been some footfall degrowth. And even though it's offset by an increase in ARPU's. So can you specify the reason for decrease in footfall growth in the mature parks? And is there a sluggish demand from which set of customer groups? Is it MICE or the school group, et cetera? And what measures are you undertaking to increase the footfalls going forward? Some clarity on that?

Dheeran, yes, you can take that.

Thanks Arun. So if you actually saw the report that Arun also spoke about recently was -- we actually had a double-digit growth in April. So we were actually on par to really drive growth across all our parks. But May actually were some unforeseen circumstances. One was there was this whole war year, which actually saw the entire entertainment industry get disrupted, right, concerts, events across. So it kind of, again, hit our consumer sentiment to step out. And the early monsoons, right, so the inclement weather is never favorable, especially during summer holiday season for an industry like ours. So the early monsoon actually impacted people's sentiment to really step out, right? These 2 are the larger reasons that actually kind of in the second half of the quarter led to a dip in the footfall, right? Obviously, schools were not -- our business was primarily from FIT in Q1 because schools is closed. That is a more Q3 business. And how did we kind of try to overcome this is? I think the answer is in our ARPU growth, right? Our ability to have operational excellence, add more value, increase our offerings and propositions and give a better customer experience and drive better ARPU growth even at a time when the footfall is growth, hedges some of our risks that is beyond our control. And we are very positive on the consumer sentiment in the midterm to the long term. And that's why if you see, we continue to double down and invest on marketing because we feel that the more we build ourselves as a brand, this will compound and over a period of time, we will be able to deliver the footfall, assuming the environment stables us.

[Operator Instructions] The next question is from the line of Adhidev Chattopadhyay from ICICI Securities.

Just first question is what is the CapEx you have incurred in the first quarter? And what is now the balance CapEx to go for the remainder of the year, especially in Chennai? And when do we see the park being commissioned, yes? That is the first question.

So we have incurred about INR 480 crores so far. And then the park is going live by December 2025. So we may have to incur additionally about some INR 120 crores, INR 130 crores to complete it.

Okay. So this is post June, you're saying INR 120 crores Post June, right? The remainder of the year will be INR 120 crores.

Right, right.

Okay. And sir, this Chennai, it will be a soft opening? Or what is going to be the opening over here in December, whatever you are planning? -- a full-fledged opening...

Yes, it will be a soft opening. We always do a soft opening first and then do a hard -- like a big launch because the sheer size of the park and we are not -- we will not be -- all the rights may not be ready in time. There's a small chance that 1 or 2 rides may not be ready. So we will not do a full opening. I think the full opening will happen most likely for summer. So that's how.

Okay. By April, May of next year is when you want to scale it up gradually to the full Yes. Okay. Sir, second question is in the context of Q1 performance and whatever demand you are seeing in the Q2. Overall for the year, any guidance on footfall growth overall for the year on last year's base? Anything you'd like to share?

Saji, you can answer. We are not -- see, we don't give guidance in that sense. I think we are expecting low single-digit growth in our -- the mature parks and the newer parks should obviously grow slightly faster. That's the kind of benchmark we keep for ourselves. Of course, then, of course, IL is also something new that we've launched. So that should also ramp up significantly. Don't have a percentage to give you, but I think low single digit in footfall growth is what we are -- I mean, maybe if you are lucky, we can do better than that. But of course, when Chennai launches, that also will change numbers a little bit. So -- but from our existing parks, I think we can expect a low single-digit kind of footfall growth.

Okay. So we still stick to some growth from existing parks, right, even after Q1, whatever the Right. Okay. That is the overall picture for the year.

The next question is from the line of Angad Katdare from Sameeksha Capital.

Sir, my first question is, to what extent do you evaluate these exogenous factors like unseasonal rains and war contribute to your decline in footfall in the last quarter?

Sorry, we couldn't hear...

Anything -- he wants to know to what degree does adverse weather effect? Yes, adverse weather will have an effect. I think our numbers can -- on a particular day, if the weather is good, I think we get -- let's say, we get 100%. If the weather is adverse, it can go down to like 60%. So we can lose up to 40%, 30%, 40% of footfalls, depending on the severity of the situation and also sentiment and things like that, yes.

Got it. And sir, given that our non-ticket ARPU now accounts for 28% of our total ARPU, what are your expectations for this trend going forward?

So we hope that non-ticket revenue should continue to climb as a percentage, and we want to get to a 60%-40% kind of number eventually, and that's the hope that that's where we want to get.

Got it. And sir, my last question is what is the peak revenue expected from the IL property? And any comments on margin will be helpful.

Very hard to predict that. We will -- it's still a new business and it's an experiment for us. So we are not looking at any -- there is no benchmark. As of now, we are doing about 60% to 70% occupancy. And we hope it will continue and maybe even grow a little bit more than that as well.

The next question is from the line of Nirav Savai from Abakkus.

My question is in continuation with the previous participant on the new hotel, which has been launched. So what is the difference in ARR compared to the previous one, what we have?

ARR is almost double of the previous resort.

Okay. And with considering a 60% to 70% kind of ARPU, do we expect about INR 20-odd crores of revenue on an annual basis?

Like I said, we can't give you a number on that right now. We'll have to wait and see how the year pans out. This is still a new business. So we can't give you a number expectation. But I think we should do -- if we do 60%, 70% occupancy, I think we definitely will be profitable and it could be even more profitable than our other resort offering.

Right. Secondly, on the Bhubaneshwar side, have we broken even this quarter or it is still loss-making?

It's broken even, Saji, you can just give some...

The Bhubaneshwar is presently for this quarter, it is EBITDA positive. And after considering depreciation and other things, it will be slightly under those.

Okay. And on the marketing spend, you see the other expenses have gone up by almost, what, 50-odd percent, if I'm not wrong. So what exactly is -- what is the reason behind this? Because last year, we had launched Bhubaneshwar, so other expenses were up. It's about 23% growth on a Y-o-Y basis. Is the entire marketing spend or there is some other component.

For example, we had our 25th anniversary. So we did some spends on that. I think Dheeran, you can explain a little bit more on this?

Yes. So I think it's across -- one is apart from marketing, we also had like our 25th anniversary launch. So that had some cost. Also some of our operating costs, right, in terms of wages, salaries, the inflationary hikes that we give them. So that also caused an overall increase in the other operating expenses.

To add on to that, Nirav, it's basically about some 30%, 35% of reduction in our top line due to the reduction in our footfall, what we expected with respect to the previous year. And similarly, about some 40% to 45% reduction in -- increase in our marketing spend, which resulted in some addition in our total expenses. Apart from that, we have certain 20%, 25 percentages with respect to all other expenses ups and downs. -- which carried for this present year. And overall, in addition to that, we have about -- we have achieved about some INR 6 crores of other income coming from our fixed deposit and then the gains on mutual fund investments and all, which offsets. So overall, we have about some INR 8 crores, INR 8.5 crores of reduction in our EBITDA, which is within these 2, 3 heads.