MOSL: DELTA CORP (Buy)-Multiple earnings drivers in place
Delta Corp: Multiple earnings drivers in place
(DELTA IN, Mkt Cap USD0.9b, CMP INR223, TP INR257, 15% Upside, Buy)
- Results in-line (GST-adjusted): Revenue grew 8.2% YoY to INR1,453m (est. of INR1,800m) in 2QFY18. EBITDA margin expanded 290bp YoY to 45.1% (est. of 38%), while EBITDA grew 15.6% YoY to INR655m (est. of INR684m). Consequently, adjusted PAT rose 34% YoY to INR433m (est. of INR413m) in 2QFY18. Casino gaming revenue grew by 17% YoY to INR1,450m and hospitality revenue by 19% to INR188m. Online gaming revenues stood at INR241m. GST of INR351m was netted off from gross revenue in the reported result. Consequently, revenue growth appears subdued and EBITDA margin expansion looks significant. Removing its impact, revenue grew 34.3% YoY to INR1,804m and EBITDA margin contracted 590bp YoY.
- To be an integrated online gaming company: DELTA plans to make Adda52 an integrated online gaming company by ramping up Rummy and venturing into Fantasy League by 4QFY18. The company is expected to invest significantly in Rummy and Fantasy League for player acquisition, marketing, schemes and bonuses. This would enable Rummy to deliver expected revenue of ~INR500m in the first year of operations. Adda52 (over 60% market share in poker) will create significant synergy for both Rummy and Fantasy League, and aid customer retention.
Delta Corp Limited is a holding company engaged in the operation of casino. Its segments include Real Estate, Gaming, Hospitality and Others. The Company operates its gaming and hospitality businesses under the DELTIN brand. It owns approximately three casinos in Goa, including Deltin Royale, Deltin JAQK and Deltin Caravela. It also owns approximately two hotels, including Deltin Suites and Deltin Palms in Goa. Deltin Suites has over 106 rooms, and offers facilities, including approximately two restaurants, lounge bar, spa, gym and swimming pool. Deltin Palms is a boutique hotel with over 27 rooms. It owns a 176 room five star hotel, The Deltin, located in Daman. The Deltin offers banquet facility in the area with approximately three bars; over four specialty restaurants. Its subsidiaries include Atled Technologies Private Limited and Delta Pan Africa Limited. The Company also owns and operates online poker site www.adda52.com.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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