Delta Corp Stock Analysis

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Overview

Let’s dig deeper into Delta Corp Stock Analysis.

Everyone reading this post might be aware of what is a casino. It is a place where people gamble and the owner of the casino always wins in every game. How?

There are lot of gamblers out there who gambles consistently and every time a game is played, Winners are allotted a certain amount of money (of the total bets) and the owner keeps a very little percentage of the money with himself. The very little percentage will not sound good to run a business but Crores of rupees are betted and the small percentage of these large bets are quite good.

Once people start gambling and luckily if they win a large bet, that becomes an addiction and the person gambles more. If you look at Las Vegas, probably the biggest casino market, Billions of dollars are spent in gambling.

About the company

Delta Corp is the only listed player in the Indian Stock exchange which is into this gaming industry. The company operates a total of 6 casinos and is also present in the online gaming segment as well through Adda52 and recently acquired a stake in HalaPlay.

Q2 and Q3 are the best quarters of the year. Q2 be the best and the Momentum is carried in Q3 which is a festive season. December month means a lot to the company. Whenever any special event occurs, One-time expense increases a bit in the particular quarter.

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For example, in 2018 ‘World Poker Tour’ had taken place in India for the first time in which Deltin Royale was a hosting partner and also relaunched ‘World Gaming Festival’ which was first time held in 2010-11 but didn’t continue as people were not ready at that time.

Therefore, spent an additional 7.5 to 8Cr were spent for marketing.

Marketing expense are the major expense for the company and it is likely to increase as they want to promote their online business more which will require more cost. 95-97% of the revenue from online segment comes from the poker side.

Their online rummy business isn’t earning a large revenue but they are now spending and focusing to increase the market share.

In 2018, the company was trying to sell the land in Sri Lanka as they bought for setting up casino but the change in government took place and the new one doesn’t want to build any casino in that area of the country.

Shifting from Offshore to Onshore will have 2 major benefits which will reduce the cost around 15-20% :

  1. Reduction in power and fuel cost
  2. Waving off Marine staff

License fee hike also affects the company’s profitability. In Q1 FY19, the fee was hiked by the GoI so the company had to spend additional 15Cr for the same.

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During the last year’s IPL, they did a soft launch of the Fantasy biz. Registrations were 100,000 and active users were 48,000 within just 2 months of operation.

Management said that delta is in the starting phase of Fantasy sports and will learn from Dream 11’s mistakes and will grow.

Usually, when visitations in Casinos increases, GGR decreases. So the management started to filter people; meaning, allowing the people who tend to spend on casinos by not hampering the other people’s walk-ins in the busy weeks like festivals. Q2 is usually a weak quarter for the hospitality segment, especially for Daman as traffic is least as compared to the whole year.

The company set up a new casino in Nepal, in the premises of Hotel Marriott, Kathmandu. They received the license in Feb 2020 and started operation of 15,000 sq ft casino in Mariott.

Delta has set 3 different teams for 3 different verticals of their online business that are Poker, Rummy and Fantasy.

Their major chunk of revenue comes from the gaming segment and a little share comes from their hospitality segment.

Here is the Revenue mix of Delta Corp

Segment Percentage
Gaming 77
Online Gaming 17
Hospitality 6

Assets

The company currently operates 6 casinos which are 3 offshore casinos and 3 onshore casinos. 1 onshore casino got in operation in Nepal this year and 1 onshore casino in Daman is ready but waiting for the approval.

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The Images below are extracted from the annual report 2019. These 3 offshore and 1 onshore casino are in Goa.

Now coming to the casinos in Sikkim and Daman. Here are the images extracted from the same.

The casino in The Deltin, Daman is ready just the approval is pending said the Management. The approval is pending from a very long time and the management is consistently trying to get the approval.

This casino is the largest (60,000 sq ft area) among all the casinos of the company. Deltin Royale comes at the 2nd position with 40,000 sq ft of area. The management expects Daman to become as big as Goa and attract more tourist there.

Delta corp owns and operates 3 properties in the hospitality segment. 2 in goa and 1 in Daman.

Hotel No. of Rooms Location
Deltin Suites 106 Goa
Deltin Palms 27 Goa
The Deltin 176 Daman

Online Segment

Due to the unfortunate pandemic, India went under total lockdown for a few months and all the casinos were forced to shut down. The live casinos contributing 77% of the total revenues were heavily impacted by Nil sales. But on a brighter side, online gaming got a boost as people started gambling on their devices. So I compared Adda52 with its peer.

Comparing Poker sites

Website Total Visits Avg Visit Duration Pages per visit Bounce rate
Adda52 464.53K 00:05:01 3.29 58.34%
Poker Bazi 296.23K 00:05:26 2.49 51.83%
6 month traffic data of Adda52
6 month traffic data of Pokerbazi

Major Traffic Source

Adda52

Country Percentage
India 84.49%
UK 5.91%
US 4.76%
Others 4.84%
Social Media Percentage
Youtube 42.95%
Whatsapp 20.26%
Twitter 16%
Daily Motion 9%
Instagram 4%
Others 7.8%

Pokerbazi

Country Percentage
India 98%
Pakistan 0.49%
UK 0.43%
Others 1%
Social Media Percentage
Youtube 46%
Facebook 54%

Watch: The Man Behind Delta Corp

Management (as of FY2020)

Name Position Total Remuniration (in Cr.) No. of shares % of shareholding
Mr. Jaydev Modi Non-Executive Chairman 0.02 200 0.00
Mr. Ashish Kapadia Managing Director 1.69 4,25,000 0.16
Mrs. Alpana Piramal Chinai Independent Director 0.00 1,500 0.00
Mr. Chetan Desai Non-Executive Director 0.03 0.00
Mr. Rajesh Jaggi Independent Director 0.01 16,500 0.01
Mr. Rakesh Jhunjhunwala Non-Executive Director 0.01 1,15,00,000 4.24
Mr. Ravinder Jain Independent Director 0.03 7,620 0.00
Dr. Vrajesh Udani Independent Director 0.03 60,000 0.02
Mr. Hardik Dhebar Group CFO 1.01 1,20,000 0.04
Mr. Dilip Vaidya Company Secretary and compliance officer 0.29 1 0.00
None of the shareholding has changed as compared to previous FY

Financial Overview

Quarterly Results

Standalone
Consolidated

P/L Statement

Standalone
Consolidated


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21 | Small & Mid Cap Investor | CFA L1 candidate | Blogger | Reader | Engineer | Life-Long Learner
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