In February 2023, bl.portfolio had recommended investors accumulate amusement park operator Wonderla Holidays at about ₹425. That call initially played out well. The stock climbed to an all-time high of ₹1,106.70 on April 8, 2024. Since then, however, it has been a sharp ride down. At the latest BSE close of ₹495.65, the stock is just about 17 per cent above the old recommendation price. It is also down about 55 per cent from its peak.

Part of the correction is easy to understand. The post-Covid rebound years were exceptional, with revenue growth of over 200 per cent in FY22 and FY23, but growth cooled to 13.3 per cent in FY24 and declined by 5 per cent in FY25 (up 13 per cent in FY26); EBITDA margin has also corrected from 49.7 per cent in FY23 to 31.7 per cent in FY26. The story is similar for the bottomline (see table).

The decline in stock price changes the discussion. While Wonderla is not a low-risk bargain, it is no longer a stock where everything needs to go right to justify investor attention with scope for outperformance over the long term. Risk to factor is that at the current market capitalisation of about ₹3,145 crore, it remains a small-cap stock. Liquidity, seasonality and execution risk matter.

Our call now is accumulate on dips, with a minimum three-year view. The stock trades at about 38 times FY26 earnings, 28 times one-year forward earnings (this is at a good 20 per cent discount to five-year average) and 21 times two-year forward earnings, per Bloomberg. Company EPS is estimated to rise over 38 per cent to ₹17.45 in FY27 and another 32 per cent to ₹23.16 in FY28. That improvement can come from Chennai’s full-year contribution, better cost absorption and recovery in park-level margins.

Business

Started in 2000, Wonderla is India’s best-known listed amusement park operator. It runs 5 parks in Kochi, Bengaluru, Hyderabad, Bhubaneswar and Chennai (commenced operations in December). That scale is bigger than listed peers such as Nicco Parks & Resorts and Imagicaaworld Entertainment. The company also has a resort and hospitality business, mainly linked to its park ecosystem. Its revenue comes from entry tickets, food and beverages, retail, resort stays, events and other guest spends. The company signed off FY26 with about ₹519 crore in revenue, ₹165 crore in EBITDA and nearly ₹80 crore net profit.

The business is simple, but difficult to build. A park needs large land parcels, water availability, safety systems, maintenance capability and local permissions. Wonderla also has a history of making some rides in-house. That helps in cost control and maintenance. The company’s brand has been built over many years, especially in South India.

The financial position is comfortable. Based on Bloomberg data, cash stood at about ₹424 crore, while debt was only around ₹6 crore. This gives Wonderla the balance-sheet strength to invest.

What has changed

What has changed since the last call is scale and expectations. Chennai has started operations and is now central to the story. The park had around 75,000 visitors in December, its launch month, with Q4FY26 footfalls of around 1.91 lakh. The management said the park had performed in line with some mature parks (Kochi, Hyderabad) in its first full quarter. Chennai also delivered about 30 per cent EBITDA margin. That is a good start for a new park. Mature parks can generate 40-45 per cent EBITDA margin, according to the management. If Chennai moves closer to that level over time, consolidated profitability can improve.

There is also headroom in non-ticket revenue. The management said the current mix is about 70 per cent ticket revenue and 30 per cent non-ticket revenue. It expects this to move towards 60:40 in the near term and possibly 50:50 over four-five years. The company has focused in terms of offerings, the assortment of products and how it is able to increase dwelling time and customer engagement to be able to increase the non-ticketing revenue (already growing faster than ticket revenue). While in the mid- to long-term, despite discretionary spend softening, it is confident that the footfall will continue to bring a good ARPU (FY26: ₹1,530, up 6 per cent year on year), and that should mitigate some of the business risks.

What needs to improve

What needs to get better is equally clear. First, footfall growth must improve. FY26 total footfalls were 32.19 lakh, up only 6 per cent from 30.49 lakh in FY25. That is modest, considering the company has added parks over time. The market will not reward only capacity addition. It will reward sustained visits.

Second, Hyderabad needs a turnaround. That park’s footfalls in FY26 were down 7 per cent, and the management attributed it to weather, early monsoon, school-group softness and one-off road-related restrictions. These may be valid explanations. But repeated weakness in a large mature market cannot be ignored.

Third, Chennai must prove itself across a full year. Launch curiosity, school holidays and marketing can lift early numbers. The real test is whether footfalls sustain through lean months, monsoon periods and normalised marketing spends.

Fourth, expansion needs more visibility. The company raised capital earlier for growth (₹540-crore QIP in Dec-2024 at ₹790/share), but new park announcements have been slower than expected. The management says it is speaking to multiple State governments and is now focusing more on tier-1 markets. Note that in tier-1 cities like Mumbai, Delhi and Ahmedabad, it’s much harder to find good parcels of land and dealing with the government also takes a bit more time. Typical capex for a new park is upwards of ₹350 crore.

Finally, margins must move up. In FY25, EBITDA margin declined to 32.1 per cent; bulk of the decline was due to increase in employee expenses and ad spends (partially linked to upcoming park launch). The margin has stayed somewhat flat in FY26. The management says historical margins would be around 40 per cent, excluding post Covid rebound years. So, it is crucial to monitor how margin trends from hereon. That recovery will depend on Chennai scale-up, Hyderabad recovery, and corporate cost control. Bloomberg consensus estimates imply margins moving up to 34 per cent in FY27.

Wonderla remains an attractive long-term leisure play, backed by brand, cash on balance sheet, low debt and expansion potential. But the stock deserves a measured approach. Accumulate gradually, especially on weakness. The next re-rating will come only if the company converts the promise of Chennai and new parks into visible earnings growth.

Published on June 27, 2026