We are big fans of theme parks but the problem in India is either they are too expensive like wonderla holidays or the quality of theme park is way below the standards (Let’s not name the small theme parks with the shitty crowd and stuff).
But a couple of years back there was an IPO of Adlabs Entertainment way steeply priced at 180 /- The company had a lot of debt (Around 1000 crores ) and was valued at around 1200 crore plus debt. The share lost confidence immediately with investors and slowly started vamping out and touched lows of 65 to 68 Rs. And we started accumulating it but of no use as the still stock is available at 80 RS.
So why do we like theme park business ???
First, the initial fixed cost is very high. You need to have lot of money to burn to establish the park, like and risks are so very high it becomes impossible to establish a new park without deep pockets. Second a small incident like an accident or similar can just dent the park image and revenues can get hit the big time. Third, the tickets and food
Second, a small incident like an accident or similar can just dent the park image and revenues can get hit the big time. Third, the tickets and food
Third, the tickets and food are very expensive, so this type of business only run well when people have spare money to spend.
So when we analyzed Adlabs business … we found many pointers which establish its long time story….
a) All the initial fixed costs have occurred .The park is established and now the focus has to be an only revenue generation for coming many years.
b) The location of the park is next to Indias richest city Mumbai, and the Student capital, The oxford of east Pune. So every year new students join colleges in Pune and this rotating population will be core to revenue You know college time, fun time with friends (Boyfriends and girlfriends and the best place is the water park ).
c) Indian population .. I don’t want to spend time on population and aspirations of the middle class .. so just who have a bit of money will be once at Imagica.
d) There is now three-day Holi bash in imagica , we believe this will be highest footfalls in company history … Sat Sun Mon three-day party !!!
e) The theme parties, with Theme marriages, with 5-star hotel to stay, Indian Summer .. etc but remember there are two theme parks and they are going to mint money like anything.
f) All the marketing they have to do is already proven in the world like Disney is doing it for years, wonderla too and that in India so they just need to copy.
e) They have a land bank of 300 crores and this company is available at 600 crores (OOPS)
f ) Manmohan shetty – “Manmohan Shetty is an Indian entrepreneur who founded and developed Adlabs Films Ltd, one of India’s largest media and entertainment firms”. He is open for foreign partners and any Chinese or American firm will be party to it .. lots of value unlocking…
Over all lot of pointers and this stock is available at its multi years low … no brainer, so Loaded fully with Westlife, Dominos, and TATA Motors…Fourth highest portfolio allocation ..
So what Warren Buffett said
“Even Warren Buffett claimed that, after selling the stock after a year of holding it for a 50% gain, was a major mistake of his.”