MOSL: DELTA CORP (Buy)-Revenue performance exceeds expectations-Online gaming segment set to bolster growth
DELTA CORP: Revenue performance exceeds expectations; Online gaming segment set to bolster growth
(DELTA IN, Mkt Cap USD1.2b, CMP INR248, TP INR327, 15% Upside, Buy)
- Revenue exceeds estimate; EBIDTA margin expands YoY, but contracts QoQ: Revenue rose 59% YoY (est. of +42%) to INR1,716m in 4QFY18, led by higher gaming revenues. EBITDA margin expanded 750bp to 39.3% (est. of 45.7%) on a YoY basis, but shrunk 310bp on a QoQ basis due to a sequential contraction in the online gaming margin to 14% from 40%. EBIDTA stood at INR675m (est. of INR702m). Adj. PAT rose 2.8% YoY to INR437m (est. of INR440m).
- Online gaming - investments in promotions to drive growth: Advertising & promotional spends are expected to drive higher user registrations. However, doubling of promotional spends on online gaming has led to a contraction in the segmental margin from 40% in 3QFY18 to 14% in 4QFY18. Furthermore, DELTA will continue incurring annual adspend of ~INR200m on Rummy and ~INR50-70m on Fantasy League. Thus, in line with management guidance, we expect online gaming EBIDTA margin to remain under pressure before stabilizing at ~25% in FY19-20.
- Policy on shift to land-based casinos likely to be announced soon: According to management, the Goa government is expected to announce a formal casino policy in the next 45 days. The policy is likely to make it mandatory for all casino operators to shift to land within three years. As an anticipatory measure, DELTA has already acquired a 100-acre land parcel.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.