I think SC has kept least priority for this case..
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Supreme Court hearing is going on and the decision is expected in July 2025 post summer holidays of the top court.
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SC will conclude hearing in GST case next week
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I find the current situation in delta to be very interesting. Spent the weekend looking at the company. Sharing my notes below.
Deep discount
The current price does have a lot of discount baked into the company. Few of the posts cover that well. The company is trading at 0.9x book value. Both the casino & the real-estate business is undervalued. Not going to write more on this.
Will the company survive?
The question in the mind of the market is whether the company will survive due to the GST notice overhang. The case is currently in the supreme court.
I was bored on the weekend, so i went through the karnataka high court order of 2023 related to Gameskraft. The below section of the judgement caught my attention:
The highlights in red are mine. This is comment by the high court judge on the respondentās case (the GST tax officials). source: order (see page 320)
The same case is now being heard in the supreme court with high implications for Delta. Now we know that there are many instances of Supreme court overruling high court judgements.
We also know that the case facts can be different for different companies. Gameskraft is primarily a Rummy company. While Delta is primarily an offline casino company. Rummy is a game of skill while casinos have games of both skill and chance.
Even given the above, do we as investors have a certainty or edge in knowing how the case will unfold? The answer in my mind is simply āI donāt knowā
Below this line is a purely theoretical thought exercise from my head. Feel free to ignore it
How should we look at this company?
Investing has always been a risky approach. Not all the facts are knowable. A lot of uncertainities exist.
As mentioned by one user above, the act of investing in Delta itself has become a āgambleā. The investment in delta has come to resemble a coin toss. Heads (judgement in favour) we win. Tails (judgement not in favour) we lose significant capital (letās assume 100% loss).
When we look at it as a coin toss, the key question to my mind are:
- Are the odds favourable?
- If the answer to the above question is yes, then how do we position size our bet?
For simplicity sake, lets assume the answer to the first question is favourable. Then how do we position size?
On Position Sizing
The answer to this can be varied. It depends on the odds (max gain to max loss) and the probability of winning vs losing. It also depends on the risk appetite.
There are multiple approaches an investor can take to position size in this bet:
1. Capital Protection Approach: Remember rule 1 & 2 of Warren Buffet? Rule 1: Never lose capital. Rule 2: Do not forget Rule 1. Or in the words of Mohanish Pabrai āHeads I win, tails i dont lose muchā. In this approach, the allocation for an investor would be 0%
2. Regret minimization approach: What is the maximum that i am willing to lose without losing sleep? This could be 0.5%, 1%, 2% of your portfolio. It can also be 0%. This depends on you as an investor and your risk appetite.
3. Return maximisation approach: This approach is what is the maximum amount that i can bet given the odds & probabilities. This is where frameworks such as Kelly criterion come into place.
For the uninitiated, the Kelly Criterion is a formula that helps one decide how much to bet (while maximising returns and minimising risk of ruin). It is primarily used in gambling and in a very few cases in investing.
But given that the returns in Deltaās outcome is dependent on the pen stroke of a judge, can we apply the Kelly Criterion here?
- What is the Odds in this bet?
Assuming the judgement is in favour, and the PB ratio reverts from current 0.9x to 2.0x (The 10 years median PB for Delta is 2.5x). This translates to odds of 2.0/0.9 = 2.2
- What is the Probability of a favourable verdict?
This is unknown. Unless someone is from the legal profession or the judges themselves, it is very difficult to estimate this. But there is an alternate way to look at this. We need to invert or flip the question to āFor a 0% portfolio allocation, what is the maximum probability of unfavourable judgementā This gets summarised in the table below:
Key takeaway of the above table. (For an odds of 1 : 2.2)
- If you estimate the probability of favourable judgement is <31%, then do not invest
- If you estimate the probability of favourable judgement is 33%, then invest a maximum of 3.3% of your portfolio
- If you estimate the probability of favourable judgement is 50%, then invest a maximum of 27.5% of your portfolio (This chunkiness in allocation can lead to high volatility in Kelly criterion). Not sure if any investor has so much courage!
But the above still does not guarantee that you wont lose money. Its a game of probabilities. And we cannot know it for certain.
Few of the key issues with the Kelly criterion is that it is very difficult to apply in investing because:
- Very difficult to estimate the odds in real life
- Very difficult to estimate the edge in real life
- At times can leader higher volatility in portfolio
The odds & edge that i estimated can be horribly wrong. I will never know for certain. (The only way to know this is to see what the judgement is in thousands of parallel universes).
I would love to hear how other investors in this forum/thread have positioned sized for risk/return in Delta (Assuming they are invested or planning to invest). Looking to learn
PS: I am not a lawyer and have ZERO legal expertise. Nothing in this post construes as legal or investment advice
Also nothing in this rant is an advice to gamble. This is a forum for investing. If the admins feel this post needs to be deleted, please go ahead. The above is more of a theoretical exercise.
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Thanks, this is a great way to look at. The way I put it, whenever you feel have the urge to take very high punt, put the money that will not pinch you when it becomes zero. Ensure that combined value of all such punts are also very small. Another interesting part is FIIs have increased its stake in last quarter and DIIs are still invested with 6%+
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GST judgment from Supreme Court will 100% come in favour of the taxpayers. All probabilities are stacked in favour of the Delta Corp. Iām a CA with 12 years of core experience in GST.
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Delta Corp ā A Long-Term Bet with Asymmetric Risk-Reward
One of the few positives in Delta Corpās case is its strong base in Goa and Sikkimāespecially in Goa, where it operates under a BJP-led state government and is a decent formal-sector job provider. With India aiming to grow tourism significantly, I find it hard to believe that the government would want to completely shut down or cripple a company that plays a major role in that ecosystem.
Yes, the government has already imposed a massive retrospective GST demand (~ā¹33,500 crore), and thatās currently under review by the Supreme Court. But despite the aggressive stance, I donāt believe the central government actually wants to push Delta into insolvencyāespecially when it risks creating bad press in a tourism-heavy region like Goa.
Delta holds valuable casino licenses in a highly regulated space where new entrants are rare. The company also has an almost debt-free balance sheet, which Iām personally a fan of. Casinos are generally evergreen businesses that thrive on footfall, and I think thereās still room for growthāespecially if Goa improves its infrastructure and cleanliness and the government pushes tourism more seriously.
That said, risks remain. Indiaās rising prosperity combine with cheap flights might make indian tourists choose exotic places like Bangkok/ KL over Goa. Poor local management, tourist safety issues, or regulatory overreach could dent Goaās appeal. And international factorsālike reduced Russian tourist inflow due to the Ukraine warāare already impacting tourism.
But if these stabilize and India follows through on its tourism plans, Delta could benefit significantly over the next 5ā10 years.
To sum it up: yes, this is a gambleābut one with potentially asymmetric upside. If the GST verdict is favorable (or even neutral), the upside could be considerable. If not, I still find it hard to believe that this company becomes a zero where the government is going to be an employment/eco-system destructor in highy sensitive tourism industry where it is looking to attract investments.
Would love to hear othersā viewsāopen to corrections if Iāve missed anything major.
Declaimer: Invested.
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There has been no update on Delta Corp yet. If there had been a positive development, the market would have reacted accordingly. However, the stock is slowly sliding because the opposition leader in Goa has challenged the ruling party, questioning why land initially allocated for an irrigation project was given to Delta Corp for constructing a resort.
WRD Minister Subhash Shirodkar assured the House that no final decision has been made, and the CADA Board will examine the issue after the current session. Meanwhile, CM Pramod Sawant clarified that the land belongs to Delta Corp and not the government, and that the matter is sub judice.
This uncertainty and political scrutiny surrounding the land issue could be contributing to Delta Corpās downtrend. But why there has been no update on the SC hearing?
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This page seems to be tracking the case. Looks like the next hearing is on 04.08.2025.
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Any update about todayās hearing? On the website shows tomorrowās date.
So, 8th August will be a pivotal day for online gaming! Hope, sense and rationality prevails and not politicsā¦
Breaking: SC to reserve verdict in GST online Gaming case on August 8
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āThe apex court has set a deadline of 4 PM on Friday for the submission of all arguments, after which it will reserve judgment.ā
So the judgement will take more time - correct?
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Final Hearing is completed today and now the Supreme Court has reserved the order. Generally, when the order is reserved the courts tend to deliver the decision in 2-3 weeks, however in some constitutional matters involving high-stakes, the time can also go on for 3 months to 6 months also.
SC to reserve verdict in GST online Gaming case on August 8 Breaking: SC to reserve verdict in GST online Gaming case on August 8
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As per the site (DELTA CORP LIMITED vs. UNION OF INDIA - Supreme Court Case Details), the judgment is reserved for August 28, 2025. However, the stock rallied 15% today. Could this be due to insider information? The volumes are also good.
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Or it could be due to crack down on real money online games.
People addicted to gambling will have to go to casino.
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It says next hearing on 28th not the judgement
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Casino is an inelastic demand business . Impact of 40% GST would have to be seen.
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A slow growth is expected; however, I am not completely ignoring this. The concept is new (like US), and I see potential when the air is cleared.
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I think imposition of 40% GST (from exisiting 28%) as a big negative for Delpa Corp.
This was over and above all the existing issues (ongoing litigation in supreme court etc) that company was facing.
I think 40% GST may have major implication on Casinoās , particularly Delta Corp, especially when it is applied on sale of chips, not gross gaming revenue. Next 4 quarters will tell the impact in numbers.
Interestingly, Stock did not reacted much to the news, indicating a neglected story, where all the negatives are already baked in the stock price.
Disclosure - Hold tracking position
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Delta Corp, considering it a risky yet interesting investment case. Our inputs provide a balanced view of its operational potential and sector-specific risks.
Delta Corp Limited, established in 1990, is Indiaās sole listed casino gaming firm. It has diversified into casino gaming, hospitality, and realty business over the years. It owns a combination of offshore casinos and land-based casinos such as Deltin Royale, Deltin JAQK, Kings Casino, and Casino Deltin Denzong in Sikkim, and hospitality properties like Deltin Suites in Goa and The Deltin in Daman. With a workforce exceeding 2,000 employees and over 2.5 lakh shareholders, Delta Corp witnessed consolidated revenue of over ā¹800 crore and EBITDA of ā¹300+ crore in FY20, indicating its domination in the organised gaming and entertainment industry.
In Q3 FY24, the offline GST outgo of the company also went up to ā¹58 crore from ā¹50 crore in Q2, as the online GST also surged to ā¹18 crore from ā¹6 crore, resulting in 6% year-on-year fall in paid visitation to 1.24 lakh. The footfall fall was due to the GST effect, the Cricket World Cup, and the seasonal effects of Diwali. December business reflected good recovery, and spends per head were relatively fixed. Consequently, EBITDA margin should stabilize at 35-36%, from 41% in the last quarter, capturing the GST effect with costs still being relatively fixed.
The price chart shows a steady decline in Delta Corpās share price over the past three years. The 1-year CAGR stands at -36.1%, reflecting a sharp drop in the past year, while the 3-year CAGR is -25.1% and the 5-year CAGR is -3.9%, indicating a longer-term downward trend, though less severe over five years.
The PE chart indicates that Delta Corpās valuation has been trending lower over time. The PE ratio has moved from around 40 in late 2022 to a range of 10ā15 in 2025, reflecting a decline in market optimism and pricing of the company relative to earnings. Peaks in PE coincide with short-term price rallies, but the overall trend shows decreasing investor sentiment and valuation compression.
Delta Corpās growth strategy is centered around core expansion projects. A new gaming ship, costing a total of ā¹280-290 crore (ā¹175 crore of which has already been invested), is due to come on stream in Q3/Q4 FY25 and will double capacity, providing retail, food court, salon, and the biggest outdoor event space in Goa. This will be followed by the Miramar Hotel project, which will increase the number of rooms by 450+ in 18-24 months to house guests of the enlarged casino operations. The Integrated Resort venture will be developed in phases beginning with a water theme park. Further, the company has also ventured into the real estate space through a joint venture with Peninsula Land, with ā¹100 crore already committed and ā¹250 crore designated for small redevelopment opportunities in Mumbai and Goa on 25-30% IRR expectations. Even after making these continuing investments, liquidity is healthy with about ā¹500 crore of cash.
On the regulatory front, Delta Corp continues to deal with retrospective GST claims under High Court stay, and hearings are pending in the Supreme Court. The Daman casino license case is still pending, and license fees are being reviewed by the government. In the online gaming space, IPO and marketing efforts were halted with changes in GST, with poker re-focusing while rummy and multi-gaming platforms are pending. Management looks forward to industry consolidation as competitors will be facing funding issues. Expansion abroad is still curbed in terms of FDI/ODI regulations, although the existing operations in Nepal continue to do well.
We would love to hear your views on Delta Corpās recent performance and expansion strategy.
Whatās your take on the regulatory challenges, valuation trends, and growth prospects.
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Do you see them as opportunities or risks?
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What are your thoughts on the sharp 1-year CAGR decline versus the 5-year trend?
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Do you think the new gaming ship and Miramar Hotel project will justify the heavy expansion costs?
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How significant are the ongoing regulatory challenges like GST claims and Daman license issues for the companyās outlook?
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How do you view Delta Corpās valuation trend, given the PE compression from 40 to 10-15?
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