Delta Corp - A huge but risky opportunity


(roysavio) #63

This can have an impact on Delta Corp (if they are moved onshore, the novelty factor might take a hit):


#64

Casino’s bring controversies everywhere even in the developed and mature economy like Japan.

coalition govt. is the best thing for casinos in Goa. This minister is getting 2mins of fame and he should stick to his agri ministry.


(Jatin Soni) #65

DELTA-20170726-MOSL-RU-PG008.pdf (315.9 KB)

Motilal Oswal report on qtry results of Delta Corp.


(roysavio) #66

Seems like better days are here to stay! :slight_smile:


(Jatin Soni) #67

Firing on all Cylinders- Report by MOSL


(phreak) #68

Strange that there is no mention of Daman at all in the MOSL report.


(roysavio) #69

Isn’t this being quite ambitious?

From that report:
We expect the company to deliver sales/PAT CAGR of 38%/75% over FY17-19E, and value the stock at 30x FY19E EPS to arrive at a target price of INR243.

75% PAT growth? :open_mouth:


(Jatin Soni) #70

Seems conservative na :wink:


([email protected]) #71

Quite possible.
Poker revenue will be 120crs for the current year, Wwhich can easily transalte to 36crs of Ebitda. Which is not there last year.
And also finance cost will be nil from the current quarter and there will increase in other income.


([email protected]) #72

That’s the best part. Market is not pricing in any upside from daman. As and when it comes, the market will price in.
Currently the market is looking how their poker site does and if there is any acquisition as far as rummy is concern.
Online will be next phase of growth for delta.


(h k gupta) #73

once they shift to land in goa revenues might double and so shall profit also increase connectivity to sikkim shall boost profitability apart from online biz gains looks very attractive discl invested for last one yr


(Vijay) #74

The Q2 results are out
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=7edba6be-a663-4fdb-b968-0bb4722e133b

The company is scheduled a conference call on 17th October 2017
http://www.bseindia.com/xml-data/corpfiling/AttachLive/1ac3ae96-34cd-4fa7-b7cd-8cfeba86d5c6.pdf


#75

Going by the concall, There are many growth drivers present.

  • Within 12 months they will have a casino in Nepal having 15k sq ft area almost one third of total area in India currently.

  • New onshore gaming zone in Goa could be game changer as it will remove all seating constraints in offshore casinos hopefully 3 yrs from now. They aim to create 4-5x tables/seats in onshore gaming zone with 30% reduction in operating costs.

  • Sikkim Casino not picked up yet as new airport is not up and running. Should inaugurate in Oct/Nov

  • Online gaming is growing very very strongly - 50% yoy growth in FY18e and will likely continue after launch of Rummy and fantasy games.

  • They could have 500cr cash in hand and zero debt by the end of FY18e which makes them fully valued on FY18 on ex cash basis.

Disc - Invested with 10% PF


(Vrushali Rakesh Jadhav) #76

Q2Fy18 Concall Highlights

Management commentary:
• Growth will be much stronger in Q3 due to festive season & holiday.
• Focus on asset light model
• Not focus on hospitality & Water Park
• Kathmandu casino; tied up with marriott hotel -Next year operational

• Online gaming:
• 30 cr revenue but reported is 24cr (bonus given to players while they deposit money to buy chips & as per accounting policy that bonus have to knock off from expenses)
• We expect 30cr revenue in Q3 & 100 cr kind year as whole.
• EBITDA: 10cr
• PAT: 6 cr
• Has potential to grow online business as much as offline.
• 50% yoy growth in FY18e and will likely continue after launch of Rummy and fantasy games.
• Rummy: reasonable contribution in next 6 month
o Expect 40-50cr topline in 1st year
• Fantasy sport: Software is ready
o Mid Jan-Test model
o Expect to start before IPL
o Cautious on model
o No plan of inorganic route
• Only co. to have poker rummy & fantasy sport on 1 platform.
• Poker market share: 200-250cr
• Adda52 market share: 100-130Cr
• Revenue in Q2: 30cr vs 30cr in Q1

• Onshore casino:
• Will get clarity in government winter session
• Already identify land parcel
• Licenses are given in lieu of offshore licenses
• no fresh licenses are issued
• on like to like basis 25% cost will come down. Power and fuel cost is cheaper
• time frame to convert offshore casino to online: 3 yrs as per Government
• New onshore gaming zone in Goa could be game changer as it will remove all seating constraints in offshore casinos hopefully 3 yrs from now. They aim to create 4-5x tables/seats in onshore gaming zone with 30% reduction in operating costs.

• Sikkim casino: airport to be operational from November
• Sikkim casino not operational in Q2.

• Sale of non-core assets:
o Sri Lanka land parcel: difficult market.
o Advani Hotels: efforts are on

• 420cr cash in hand
• No need to raise capital

• Capex:
• Acquisition of land: 125 cr for next 3 yrs
• Development of offshore casino -125cr
• Expenses or spend on rummy & fantasy sport-50 cr each per year

• Total tax outflow (Gaming tax & entry tax)-26.5%
• GST impact-1.5%
o 35 cr total GST paid by delta.
• Bonus act revised. Effective from this quarter so onetime cost hit P&L.
• 4-5 cr onetime expenses
• Whole impact on margin: 8%

• Capacity utilization; 75-80% on weekends holidays & peak season
• Otherwise 65%


(kums17) #77

Ace investor Rakesh Jhunjhunwala’s wife Rekha Rakesh Jhunjhunwala sold 25 lakh shares in Delta CorpBSE -0.65 % on November 7 at Rs 280.35 per share.

According to bulk deals data available with the NSE, Aarti J Mody Trust also sold 36.40 lakh shares at an average price of Rs 280.39 per share.

Read more at:
//economictimes.indiatimes.com/articleshow/61560821.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


(Jose) #78

Has the share gone too expensive?? P/e at 120.Is there any chance of considerable increase in revenue to justify the very high p/e without includin deltin daman .


(Mahesh) #79

I think so. I have a tracking position and love the long runway ahead, Delta being best positioned to capitalise on increased gambling/gaming options goong forward. But not adding meaningful positions due to valuation concerns.


(Jatin Soni) #80

http://www.btvi.in/videos/watch/24937/exclusive—gst-helped-deltin-due-to-different-tax-layers–delta-corp

Visitations have grown ~38% cagr to 1000 a day from just 50 in last 10 years!!
Once on land they can create 10x capacity vs current.
Operating costs like Marine staff, generators, jetties etc to reduce significantly as they move out of river.


(roysavio) #81

(Jose) #82

But management has no idea when this shifting will take place.and the offshore casinos seems to be running at 75 % capacity scaling up is not going to be easy immediately as far as footfalls are considered.obviously per head revenue is increasing. I used to hold it from much lower levels but sold off just before real gains started to happen.want to buy again ,but totally confused…