Wonderla Holidays Limited (WONDERLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Wonderla Holidays Limited Q1 FY '27 Earnings Conference Call, hosted by MUFG Intime. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Omkar Bagwe from MUFG Intime. Thank you, and over to you, Mr. Omkar.

Good afternoon, everyone. I welcome you all to the earnings conference call to discuss Q1 FY '27 results of Wonderla Holidays Limited. To discuss our results, we have with us from the management, Mr. Arun Chittilappilly, the Managing Director; Mr. Saji Louiz, Chief Financial Officer; and Mr. Dheeran Choudhary, Chief Operating Officer. They will take you through the results, and then we will proceed to Q&A session. Before we proceed to the call, a small disclaimer. This conference may contain certain forward-looking statements about the company, which are based on the beliefs, opinions and expectations as on date of this call. The actual results may differ materially. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is also given on Page 2 of company's investor presentation. Now, I would like to hand the call over to Mr. Arun Chittilappilly. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thanks for joining us. I hope all of you have had an opportunity to review our financial results for the quarter -- first quarter of FY '27. We are pleased to report that we have delivered one of our best quarters ever, making another important milestone in our growth journey. During the quarter, we recorded an income of INR 252 crores, representing 41% year-on-year growth, while EBITDA grew 39% to INR 122 crores. Our footfall crossed 12.25 lakh visitors, up 33% over the same period last year, reflecting the continued strength of our brand and growing demand for quality leisure experiences. This performance was broad-based. Our existing parks continue to deliver healthy growth, driven by higher guest volumes and as well as improved guest spending. Revenue from our mature parks grew by approximately 15%, supported by 7% growth in ARPU and -- sorry, 8% growth in ARPU and 7% growth in footfall. Our Chennai Park continues to scale up exactly as we had envisaged. In our first year of operations, the park contributed approximately INR 45 crores in revenues and over 2.4 lakh visitors during the quarter. As the market matures and awareness continues to build, we remain confident that Chennai will become an increasingly significant contributor to our long-term growth. Beyond our parks, we are also encouraged by our hospitality business. Both our resort offerings delivered their best -- and along with Hyderabad Park, delivered their best ever quarter. Our focus remains unchanged. We continue to invest in guest experience and expanding premium offerings and improving operational efficiency. As our newer assets continue to mature and our existing parks deepen their market penetration, we believe that Wonderla is well positioned to sustain profitable growth in the coming quarters. With that, I would like to hand over to our CFO, Saji, who will take you through the financial performance.

Thank you, Arun. Good afternoon, everyone, and thank you for joining us for the Q1 FY 2027 earnings call. Let me take you through the key highlights of our performance during the quarter. Our revenue from operations increased by 44% Y-o-Y basis to INR 243 crores. Our existing parks, Bengaluru, Kochi, Hyderabad and Bhubaneswar, delivered a healthy 15% revenue growth, driven by 7% growth in footfall and 8% growth in ARPU. Our new asset, Chennai Park, contributed INR 45 crores in revenue during the quarter with a footfall of 2.42 lakhs. EBITDA including other income stood at INR 122 crores, registering a 39% Y-o-Y growth, while EBITDA margin remained strong at 48%. Profit after tax for the quarter stood at INR 72.79 crores, translating into a PAT margin of 29%. Let me now explain the key drivers behind the INR 34.48 crore increase in EBITDA, including other income. Our existing parks contributed INR 15.93 crores, accounting for 46% to the EBITDA growth. Chennai Park contributed INR 21.86 crores, representing 64% of EBITDA growth as the park continues to scale up well. Our resort business added about INR 3.19 crores, contributing 9% to the EBITDA growth. The above said gains are partially offset by an increase of INR 6.5 crores in the corporate overhead, primarily reflecting investments made to strengthen the organization and support our expanding operations as well. During the quarter, company also earned INR 9.47 crores as other income, predominantly from interest and gains on investments. Overall, the EBITDA bridge demonstrates that the growth was driven by a healthy performance across our operating business, led by continued momentum in our existing parks and successful scale-up of our Chennai Park. Our PAT increased by INR 20.22 crores, primarily driven by the improvement of EBITDA. This was partially offset by INR 11.49 crore increase in depreciation, mainly on account of Chennai Park becoming operational, and an incremental tax expense of INR 2.75 crores. Moving on to the operating metrics. For Q1 FY 2027, footfalls across our parks were as follows: Bangalore Park, 3.43 lakhs, up by 6% Y-o-Y; Kochi Park, 2.5 lakhs, up by 6% Y-o-Y; Hyderabad Park, 2.9 lakhs, up by 11% on Y-o-Y basis; Bhubaneswar Park, 1 lakhs, up by 4%; Chennai being a new park, 2.42 lakhs. Our average ticket price for the quarter stood at INR 1,310, registering a 2% Y-o-Y increase. Average non-ticket spend per guest increased by 20% Y-o-Y basis to INR 591, reflecting a continued strength in our in-park spending initiatives. As a result, average revenue per user, the ARPU, increased by 7% Y-o-Y to INR 1,901. With that, I would like to conclude the financial update. We will now be happy to take your questions. Thank you.

[Operator Instructions] The first question is from the line of Shamit from AMBIT Capital.

Congrats on a good set of numbers. So a couple of questions from my end. Your -- if you look at your ex Chennai Park, the footfall grew by 7% year-on-year this quarter after a mixed trend over the last few quarters. So should we view this current growth rate as sustainable going forward in the other parks? And also, on your margin, so once Chennai Park matures, what kind of margin trajectory are you expecting?

See, footfall growth is unpredictable by its very nature. Every quarter, it will keep varying. So this quarter was good, and we are hoping that for the remainder of the quarters, it will be good as well. Having said that, I think this year has started on a strong note. So I think we are hopeful that this year should be -- should continue. Chennai margin should be in line with other margins as it progresses. It's still the first year, so it's hard for us to kind of tell you how it's exactly going to be. But long term, it will give the same margins as other parks or at par.

Got it. But any particular initiatives did you take in those parks, which led to this footfall growth?

We have done our usual -- summer is the time when a lot of families come and visit us. And I think the weather was favorable. So many things -- factors have helped us. And I think our marketing also, everyone -- every function of ours also played a part. So it's nothing unusual there.

And how was July looking for other parks, as well as Chennai, in terms of footfalls?

So far, it's looking good. But again, like I said, it's -- July is just 1 month. So we'll have to wait and see for the remainder of the quarter and see how it goes.

The next question is from the line of Vinod Krishna from Avendus Wealth.

My question is on Chennai Park. So how should we see when -- so this year itself, we'll go to 1 million. Or normally other parks take 3 to 4 years to peak. So how are you -- management looking at it?

A couple of years, for sure. I mean, we will not reach 1 million in 1 year. That may not happen because like I said, it's a new park, so it's hard to predict how the footfalls will come about. But it's a strong start for sure. So we are -- let's hope -- I mean, it's going to be a strong start. But exact how the footfalls are going to pan out, again, it's hard to predict.

And sir, should we assume that 10% of every park revenue goes into new rides or new CapEx into the same park? Can we assume that...

Yes, roughly. Yes.

Sir, my last question is -- 10% of revenues, yes.

Yes.

Sir, my last question is on the -- now that we have all the South India is done. So when should we -- okay, let me ask this way, like in the next 3, 4 years, what are the minimum number of parks we should be adding, and most of it will be large or mid parks? Or how are you looking at it? Because there's no clarity on that part alone. I think that's what is being an overhang on the company also. So...

Yes. So we hope to do a couple of big projects and maybe a couple of small ones as well. We will keep you posted, like I said earlier. And I think by the end of this year, we will have some update on that. Again, we can't speculate on which one will close. We are working on many parallel cities, so -- and which I've said in past calls as well. Once we close something, we will keep you updated, and we'll take it from there. So we are working on both small and medium parks.

So in the next 3 to 4 years, at least 2 large parks can we assume?

We'll definitely work on 1 or 2 parks -- large parks, and then maybe 1 or 2 small ones as well.

In the next 4 years. So around 3 to 4 parks should be there over the next 3 to 4 years. So by the end of this year -- you're saying, before December, you'll announce something, 1 park at least?

Yes. Before the end of the financial year, we will have something to announce.

Also on the resort side, how are you thinking? Is it just around the parks? Or you also -- like THE ISLE one, you are also ready to do resort as a separate adjacent business? Because that's been extremely successful for us.

Yes. So we're looking at expanding into that vertical as well. So we will definitely, again, expand into other cities. Maybe initially, we will start with the cities where we have already projects. And then, we are also open to looking to other cities like -- other places like Goa to do resort alone -- stand-alone resort projects also. We will keep you updated, like I said, once we announce something.

The next question is from the line of Abhishek Shankar from ICICI Direct.

Congrats on the good set of results. So my question is again regarding the parks. What happened exactly during this quarter in Hyderabad that we're seeing such a large growth? Is it because we had a lower base? Or is it some initiatives that we took in Hyderabad? And how is the new roller coaster ride doing in Bangalore? Is it leading to some incremental growth there -- I mean, incremental interest from people?

Yes. So actually, from all our large parks, the older parks, if you see Kochi, Bangalore, -- Hyderabad is still one of the newer parks. Keeping the 2 years of COVID aside, it was only operational for 8 years. So we did have some more juice to squeeze in terms of ramping up footfall. And I think our investments that we made in terms of marketing and kind of building for the brand in Hyderabad over the last few months kind of gave us that benefit in terms of a much higher footfall growth compared to Bangalore, which is 20 years, and Cochin, which is 25 years. So that's the reason why you see a higher growth in Bangalore. On your next question, the new roller coaster has been received extremely well. The customer dwelling time, customer experience scores are really up. And when we add such global-standard rides, it definitely becomes a star attraction for people to come and visit the park again. So it increases frequency, which in turn drives more footfall.

Yes. So just another question that we -- currently, the rainfall deficit has reduced, but there is some rainfall deficit that is still there. So do you see any directives coming from the government regarding the park operations? We've seen something in Mumbai, though. But in South also, we are seeing some rainfall deficit. So what are the thoughts...

As of now, there is no issue. I think rainfall has been actually very strong in the last few days. But again, we can't predict these things. We'll have to wait and see. As of now, it's all fine.

Okay. And last question, is there any disruption in Kochi Park? In the last 3, 4 days, there has been heavy rainfall in Kerala. That's why...

Yes. Whenever there is heavy rainfall and landslide, some disruption will be there. We are not -- in our area, there is not much issues. But of course, there are disruptions in the state, and definitely, that will have some effect on footfall also.

The next question is from the line of Navin from ithoughtPMS.

Congratulations on a great start to the Chennai Park and a good set of numbers. So just a couple of questions from my end regarding the parks. So with respect to Bhubaneswar, right, so even in the commentary, you had alluded that you will be looking to add more smaller parks in the future. And just looking at the ASP numbers for Bhubaneswar, they've been flattish for the last couple of quarters, maybe even the last 1 year, 1.5 years. So I just wanted to understand broadly, is there -- are there any learnings we are taking from like doing the smaller park, smaller format that will carry on to newer parks?

See, Bhubaneswar for us, as far as we are concerned, it's like an experiment. We've never done a small park before. So I think we are still learning. But I think because it's a category-creating kind of asset, sometimes the footfall growth will be slower. But I think long term, we are hopeful that Tier 2 or Tier 3 also can support parks of small size. We are not worried. It's already EBITDA positive, so we're not really worried about it. Of course, we will have to do more experiments to see how we can attract more footfall from neighboring areas, et cetera. That I hope answers the question. And we are not shying away from looking at other smaller cities. But of course, I think our focus is on larger cities because for the same effort -- maybe more CapEx, but I think the effort -- returns are better from larger cities as well. But having said that, we do have so many smaller cities. So we will pick and choose based on what is available and what the governments are offering us. And that's the way we look at it.

Got it. One small follow-up would be, so is my understanding right in the sense that we'll do smaller format only in the Tier 2, Tier 3 kind of locations?

Yes. Smaller format, we will be doing in the smaller locations, yes.

Got it. Yes. So the next question is going to be on the Chennai Park, right? So if I -- just correct me if I'm wrong, but I heard that it contributed INR 21 crores to the EBITDA itself. Am I right? That's what the CFO mentioned?

Yes.

Yes. So if I just do some basic math, just multiply the footfall and the ARPU, I'm getting around INR 45 crores of revenue. So would it be right to assume that the Chennai Park is already at the like mature park level of margins? So what is expected...

Yes. For now, it is. But then, we don't have a full picture until we finish a year because every quarter is different, and the footfalls can vary. For example, Q2 is a much weaker quarter compared to Q1. So we'll have to wait and see how it all pans out. But as of now, yes, for a quarter like Q1, I think it is tracking similar to other larger parks, which is very healthy.

Got it. And is the ramp-up for a new park generally this quick? Or is -- are you surprised by Chennai?

It's one of the fastest ramp-ups that we've had. But I think, again, like I said, we caution, until the year is over, we don't know how it's going to play out because the highs tend to be higher and the lows tend to be lower in a new park -- a new business. But we'll -- and as of now, we are hopeful that it will track like a mature park.

Got it. And just one like kind of a long-term kind of a question. So I believe we have discussed in earlier quarters like the concept of IPs for parks, and if we don't license them, our own IPs maybe. So like I think we are not really like going for anything like that. But is there any change in view? Or if you could just broadly outline your view on IP and parks and if they would work for our format?

See, paying foreign money for IP and then getting that to India, I don't think it works financially. So we believe in creating our own IP. And that is the way we've been working. Of course, we are open to partnerships and things like that. So from time to time, if we find something that's useful and relevant to our audience, we will definitely work on that. But other than that, we would like to use proprietary IP wherever possible.

I'm sorry, sir. So a small follow-up would be like I'm not referring to the rides. For example, one of our competitors, they tied up with Chhota Bheem and like Mr. India, and they have some rides based on that, right, something along those lines. They don't even need to be foreign.

What does that -- did that lead to any footfall or revenues? I don't think so, right? So I mean, for me, finally, it all comes down to whether it makes financial sense. So we'll take it as it comes. Whenever there are opportunities, we do discuss with various companies from all over the world to see whether we can do something, but it has to make sense.

The next question is from the line of Girish Raj from Bryanston Investments.

The result is very encouraging. But when we look at the Bhubaneswar performance, I just want to understand how much management bandwidth is allocated for this particular asset at this point of time?

I would say 1/5.

1/5. Okay. So equally spread.

Yes. We will definitely spend time on all of them.

Got it. There seems to be a step-up in the Bangalore and Hyderabad ARPU. ARPU is something which we control, while we don't control the football. Is there a new -- is this a new base to work on? And is it because of the new attraction like roller coaster, which is added? Your comments would help. '

So I think there are 2 large reasons for this. I think one is the kind of cohorts that we are targeting and want to bring to our parks, especially during the summer seasons. These are high-spending cohorts. But I think the main focus is, how do we create and premiumize in-park experiences? And these are not just ride-based, but just increase and enhance the dwelling time, make the experiences a lot more immersive. And this has led to the non-ticketing spend kind of growing exponentially high for us, like the CFO has stated, and that's actually the major contributor for ARPU. And we feel that there is still a lot more room if you are able to give the right kind of value proposition for customers to come into our parks and spend. And I think we keep innovating and taking a lot more initiatives in building in-park experiences, which are outside of rides, to build.

Got it. But the question is, since there is a step-up already compared to previous years, is this a new base to work on for...

At a CAGR level, our ARPUs over the last 4 years has been growing at 8%, right? So we've already been -- we've already like started growing fairly well, and we are now at a high base. So we cannot expect similar growth. We continue to dig deep and look at more initiatives and innovate more, but cannot comment whether we will get similar kind of growth every quarter.

The next question is from the line of Richa Agarwal from Equitymaster.

Congrats on a good set of numbers, sir. Sir, my question is related to capital intensity that would be required to set up new parks. If you have to set up a park like Chennai or Orissa now, how much this capital intensity per acre -- or maybe even park-wise, if you could comment on what kind of capital would be required? And what is the IRR or payback period mix that you would like to look at while considering a new park expansion?

No, the capital requirement is completely dependent upon the kind of parks we do, whether it is a Tier 2 city or whether it's a Tier 1 city. So generally, we look at it like a payback period. So, for larger parks, we'll get about 7 to 8 years, or 6 to 7 years. And then, for a small format of parks, we can get a ramped-up payback of about some 4 to 5 years. Again, this is a ballpark number. This can change. It depends on the real scenario at the park level. Chennai Park, recently, we concluded about INR 570 crores to INR 600 crores of CapEx for setting up our 40-plus rides. But earlier days, it was slightly lesser. So now with Bhubaneswar Park, if you could see, it's about some INR 190 crores of capital expense for setting up the park.

Okay. And sir, could you also comment on what kind of seasonality we should look at across different parks? And what are you doing to just counter the effect of the variation in different quarters?

See, our largest quarters are usually quarter 1 and 3, as you could have seen historically. Quarter 1 is also a quarter which drives more volume and value. Quarter 3, because it's a largely group-dependent business, is more volume-led. I can't comment much on Chennai because we are yet to see a full year. We will only know as the whole year gets over. I think apart from that, in quarter 2, quarter 4, we continue to invest on other initiatives and other cohorts that we feel have the time, especially on peak days. So we run multiple campaigns for that. But quarter 1 and quarter 3 will always be our largest quarters.

Okay. And sir, my last question is, I mean, keeping the seasonality in mind, what would be a conservative figure for -- what kind of footfall at peak level are possible across all these 5 parks? Yes, what is the number that you aspire for that -- from your mature and new parks, if you combine? At maturity, what kind of -- is there any structural limit to the footfall keeping the seasonality in mind?

We can handle maybe up to 1.2 million, 1.3 million visitors for a large park. And then, maybe the small park can handle -- like Bhubaneswar can handle maybe like 5 lakhs or something like that. That's the structural limit. Yes.

The next question is from the line of [ Harsh from Artventures ].

Congratulations on good set of numbers. My question is related to the segmental data which we published. Under operating revenue, there is a sharp increase in the other segment from INR 38 crores to INR 63 crores. Can you elaborate on that?

Could you please explain, where is the difference, you are saying?

Under segmental revenue, which we give in our press release, operating -- other operating revenue, which has grown from INR 39 crores to INR 64 crores -- INR 63 crores. So can you elaborate on that? What leads to the sharp jump?

Other nonoperating, what -- we usually do 1 segment basically for the parks. And then, resort and other income will be coming as a unreported segment, mainly THE ISLE-related resort of ours, Wonderla -- Terrea and ISLE. This will be the other segment.

The resort business is part of that, yes.

And then, other income.

The next question is from the line of Akhilesh Pathak from Smart Sync Services.

First of all, congratulations for a great set of numbers, Arun and team. My question is regarding the parks that may be coming up in future. Are you looking for the same kind of model which you had in Bhubaneswar, where you leased land from government, 50-acre land at a very low cost. So the entire infrastructure cost actually became minimal, and that was a very asset-light model. So are there plans for a similar kind of model?

We'll definitely look at asset-light models wherever possible. We can't say which -- we might be able to do it in a larger city also. We are exploring it, but it depends on the -- each deal in each city is going to be different. The offering also will be tailored accordingly. So it's hard to predict which one will be asset-light or how it's going to be. But there is scope to do that as well, yes.

Another question is, are we looking at timeshare kind of model and vacation ownership for the resorts that we are building?

Not really. I think we want to be in the -- we prefer being in the retail space. Timeshare is not something that we are looking at. Once maybe we have a bouquet of resorts across maybe multiple states, then at that point, I think it makes more sense.

The next question is from the line of from Abhishek Shankar from ICICI Direct.

So last time, you had reiterated that you would be looking at 50% -- 40% to 50% mix of non-ticketing revenues, which currently stands at around I think 30%. So does that stand as of now? And also, on mature parks, you had said that you will be delivering around low-single-digit footfall and larger part of growth will be added through ARPU. So are we retaining same mix?

Yes, that's -- your assumption is correct. That's it.

The next question is from the line of Yash Mishra from SKS Capital and Research.

So I had a simple question. How much of your current quarter blowout performance has been due to weak monsoons and how much of that is normalized? If you can give us some color of that?

That is not -- I mean, the monsoon starts usually from June. So not really a big -- it doesn't really affect our first quarter performance that much. June is not a very strong month. Our highest footfalls come in May. So May, luckily, we didn't have any unseasonal rains. Usually, sometimes we have unseasonal rains, and that is what causes some dip in footfall and things like that. This year, we didn't have any of those.

So compared to last year, same quarter, was there unseasonal rains in May? Was the base lower for this...

I think there was less rain this year, I think, generally because of the super El Nino. I think -- but even otherwise, I think rains have been less. I mean, May is usually not a rainy month. But in the last few years, it's been erratic. So, that is probably one of the reasons why we...