Wonderla's high valuations look sustainable

Rising footfalls, strong earnings outlook provide comfort

The stock of India's largest amusement park chain — Wonderla Holidays (Wonderla) — is trading at premium valuations not just to its domestic peer (Adlabs Entertainment), but also to most global peers such as Disney, Six Flags, Cedar Fair and Sea World Entertain-ment, among others. At current levels, Wonderla is trading at 28 times FY18 estimated earnings, whereas its global peers are trading anywhere between 15 to 26 times CY18 estimated earnings. Although any comparison with global peers is a far cry, the question is can the stock sustain these valuations?

A business model, which allows the company to set