Delta Corp Ltd.

NSE: DELTACORP | BSE: 532848 | ISIN: INE124G01033 |Industry: Misc. Commercial Services
|Expensive Underperformer

Delta Corp Ltd.    
10 Jan 2019
Motilal Oswal
EBITDA margin contracted 150bp YoY, recovery in the online gaming EBIT margin (19% in 3QFY19 v/s 2% in the last quarter). However, higher-than-expected tax restricted PAT growth to 13% YoY (INR505m v/s our estimate of INR497m). Casino gaming revenue grew 30% YoY (flat QoQ) to INR2,021m in the quarter, supported by increasing visitations (+18% QoQ to 118K). Online gaming revenue grew 33% YoY (+8% QoQ); EBIT margin contracted 2,100bp YoY, but expanded 1,700bp QoQ to 19% (expected to sustain at 15-20% levels) on account of cost and promotional spend rationalization DELTA aims to cautiously invest in the right channels to sustainably grow a loyal user base. Hospitality revenue declined 17% YoY to INR193.8m; the company recorded segmental EBIT loss of INR59.3m. We roll forward our target price to Dec20E EPS of INR11/share. We continue valuing the stock at 30x P/E to arrive at a target price of INR320/share.
Delta Corp Ltd. has gained 22.79% in the last 1 Week
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