Wonderla Holidays Expects Footfalls To Increase Post GST Rate Cut

Shares of Wonderla Holidays Ltd. climbed nearly 9 percent to Rs 425, the biggest intraday jump since July 2017, a day after the announcement of a cut in the Goods and Services Tax levied on admission to amusement parks.

The GST Council yesterday reduced the tax levied on amusement parks, theme parks, water parks and the like to 18 percent from 28 percent earlier. The new rates are effective from Jan. 25.

The update was viewed positively by investors, with the share price hitting its highest level since December 2015.

Arun Chittilapilly, the company’s managing director, said the revision will result in a near 10-percent reduction in ticket prices. As a result, he expects footfalls at the company’s amusement parks will increase.

Wonderla’s results in the quarter ended December were negatively impacted by the 28 percent GST levied on admission to its theme parks, Chittilapilly said. The tax incidence before the implementation of GST was around 17 percent.

Wonderla, which currently has three amusement parks in Bengaluru, Kochi, and Hyderabad, is working on the completion of a fourth in Chennai. The park is likely to be operational within two years, since the acquisition of the necessary land was recently completed, said Chittilapilly.

A majority of the analysts tracked by Bloomberg have a buy rating on the stock, whose trading volume was nearly 48 times its 30-day moving average in early trade today. The stock has outperformed the S&P BSE Sensex so far this year, having gained 14.5 percent compared with the index’s gain of 3.7 percent.