MOSL: DELTA CORP 2QFY20 RESULTS (Buy)-Online sweetens the pot-op performance intact
DELTA CORP 2QFY20 RESULTS: Online sweetens the pot; op performance intact
(DELTA IN, Mkt Cap USD0.6b, CMP INR171, TP INR254, 49% Upside, Buy)
- Revenue flat; EBITDA margin expands marginally: Revenue came in flat YoY at INR2,008m (our estimate: INR2,059m) in 2QFY20, while the EBITDA margin expanded 140bp YoY to 40.5% (our estimate: 37.5%), primarily driven by a multifold expansion in the online business profitability (+2,150bp YoY to 31%). PBT declined 3% YoY to INR748m (our estimate: INR715m). Adj. PAT grew 22% YoY to INR585m (our estimate: INR540m). For 1HFY20, sales were flat YoY, while EBITDA/adj. PAT increased 3%/12% YoY.
- Online drives growth; Casino marred by competition, general slowdown: Casino revenue declined marginally by 1% YoY to INR2,002m, while the segmental EBIT margin contracted 370bp YoY to 32.8%. Increased market capacities by ~20%, general slowdown, extended monsoon and the taxi strike were the key reasons impacting visitation growth. Margin compression can be attributed to higher spend on offerings/deals to drive visitations. On the other hand, online revenue increased 17% YoY, driven by a boost from higher promotional spend in the prior quarter. However, such incremental spend were avoided in 2QFY20, leading to improved profitability. We expect the online margin to sustain at ~20% as DELTA attempts to stay competitive.
- Key takeaways: (a) Hearing of Daman writ petition is scheduled on 14th Nov’19. (b) Land policy is likely to be taken up in the winter session. (c) Clarity on GST taxation is likely to emerge soon.
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.