MOSL: DELTA CORP (Buy)-Top-line traction led by Gaming; profitability exceeds expectations
Delta Corp: Top-line traction led by Gaming; profitability exceeds expectations
(DELTA IN, Mkt Cap USD1b, CMP INR264, TP INR329, 25% Upside, Buy)
- Revenue up 19% YoY, margin expands 370bp YoY: Revenue increased 19% YoY (our estimate: +14% YoY) to INR2,043m in 4QFY19, led by growth in gaming revenue. EBIDTA stood at INR879m versus our estimate of INR784m, with the margin expanding 370bp YoY to 43% (our estimate: 40%), primarily led by a recovery in the online gaming margin (EBIT margin at 24% v/s 14% in 4QFY18). There was an exceptional item related to the gain on the sale of its Fantasy League business to Halaplay Technologies Private Limited. Adj. PAT grew 19% YoY to INR544m (our estimate: INR495m). For FY19, sales/EBITDA/PAT grew 31%/29%/29%.
- Sustained growth in Casino; Online biz margin jumps 1,000bp YoY: Casino gaming revenue grew 21% YoY to INR1,981m, with the segmental EBIT margin expanding 40bp YoY to 36.8%. Visitations increased 40% YoY to 120K. Online gaming revenue grew 11% YoY, with the segmental EBIT margin up 1,000bp YoY (+500bp QoQ) to 24% (expected to remain at 18-20%, going forward). Hospitality revenue grew 8% YoY to INR236m, with an EBIT loss of INR29.5m.
- Key takeaways: (a) Investment in Jalesh Cruises is ideal, as DELTA has the right to operate casinos in all its cruises. Expect revenue of INR20-25m/month. Jalesh plans to add 3-4 new cruises over the next 18-24 months. (b) On Halaplay investment, the platform has already grown 3x, given the ongoing T20 cricket series. Multiple upcoming sporting events such as the IPL, the Cricket World Cup and thereafter the T20 Cricket World Cup should lead to revenue of INR1,000m in FY20.
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.