This Small Cap Stock Has Already Surged 80% This Year, But Analyst Sees Another 40% Rally

Shares of Wonderla Holidays have gone up close to 80% since the start of the year, analysts at ICICI Securities expect further upside as they point out that the company continued growth momentum in the June quarter.

The Wonderla Analyst: The analyst team led by Adhidev Chattopadhyay maintained the ‘buy’ rating for the stock raising the price target to ₹904 from ₹738. The revised price target indicates a 40% upside from the stock’s last closing price of ₹640.15.

The Wonderla Thesis: The brokerage firm said that the company delivered another strong quarter as revenue grew 24% year-over-year to ₹185 crore and EBITDA grew 28% YoY to ₹116.9 crore.

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The firm pointed out that there was a slight YoY decrease of 1.4% in total footfall across the cities of Bengaluru, Kochi, and Hyderabad at 11 lakh. However, Bengaluru experienced a notable increase of 11% in footfalls, whereas Kochi and Hyderabad witnessed declines of 8% and 10% respectively.

As per the analysts, despite the fluctuation in footfall, the focus on optimising average revenue per user (ARPU) was instrumental in driving a substantial 25% year-on-year growth in overall ARPU for the June quarter, reaching ₹1,626. Consequently, this ARPU growth contributed to a robust 24% year-on-year increase in revenue. The brokerage firm raised its FY24/25E EBITDA estimates by 4.6% and 2.9% respectively.

The analysts added that the company has said that construction work on the new Odisha Park is going on in full swing while Chennai Park construction is expected to commence shortly. Additionally, the company is also engaging with State Governments across India (Madhya Pradesh, Uttar Pradesh/Punjab) for new parks.

Price Action: Wonderla’s share price was up 0.42% to trade at ₹642.85 in early trade on Thursday.

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