Delta Corp share fell despite reporting highest ever revenue in Q2FY23

Delta Corp Limited, is an Indian gaming and hospitality firm that owns and runs many casinos and hotel brands. It specializes in casino (live, electronic, and internet) gaming, with the majority of its offshore casinos located in Panaji, Goa.

Recently, the company came into the limelight as they couldn’t manage to impress the street with their Q2FY23 results that were announced on 11th October 2022. Delta Corp has a market cap of Rs 5,000 crores and is the only listed player in the gaming & hospitality sector. In Q2FY23, Delta Corp reported the highest-ever revenue by surpassing pre-covid numbers but couldn’t beat estimates. Even on the technical front, the stock delivered a negative YTD return of 16.03%, owing to a sharp correction while it started rebounding last month by giving 3.92%. Therefore, it becomes important to analyse the reason behind such investor sentiment.

So, let’s now dive deeper into the Q2FY23 results & check if the Delta Stock carries some potential for future returns.

Delta Corp results Q2FY23: Highest ever revenue in Q2FY23 due to

Delta Corp has reported a PAT of Rs 69 crores, translating into a YoY growth of 413.6%. This is because the company reported losses in Q2FY22 on account of the pandemic. While sequentially the company delivered 21% growth from Rs 57 crores in Q1FY23. This growth has been supported by revenue growth of 260% YoY and 8% QoQ to Rs 270 crores in Q2FY23.

The company said “We have reported highest ever revenue for the quarter. We have surpassed the pre-COVID set of numbers and have registered strong growth.”

Jaydev Mody, Chairman of Delta Corp said, “The growth can be attributed to the surge in domestic travel. This has enabled growth and we believe that this trend will continue for a while. In the meantime, another development that is in the pipeline is the launch of our new vessel in the public domain. This will further the growth momentum and help us achieve desired results”

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Delta Corp results Q2FY23: EBITDA margin % robust at above 35%

The company has reported an EBITDA margin of Rs 100 crores in Q2FY23, up 626% YoY from Rs -19 crores in Q2FY22. Whereas on a sequential basis, EBITDA grew 13.6% from Rs 88 crores in Q1FY23. While the company has a very strong EBITDA margin% above 30%, it reported a margin% of 37% in Q2FY23.

Although Delta Corp’s management highlighted in the Q1FY23 results that “The casino business operating out of Goa right from July 1, 2017, has been paying a 28% GST, therefore, from a GST standpoint, there won’t be any effects as far as we are concerned.” Investors still believe that the 28% GST consideration on the casino industry is a significant drag on the company. 

Univest View with Technical Analysis:

Shares of casino and hotel operator Delta Corp rose marginally in early trade on October 12. Still, they then slipped 2% even as the company posted the highest-ever consolidated revenue in Q2FY23.

The graph shows that the share price fell sharply during the first quarter of FY23, reaching a low of Rs 162. After that, share prices started to rise again, but Q2FY23 was unable to improve investor confidence as the share price declined for two straight trading days

The graph shows that the share price fell sharply during the first quarter of FY23, reaching a low of Rs 162. After that, share prices started to rise again, but Q2FY23 was unable to improve investor confidence as the share price declined for two straight trading days. The reason was that BofA Securities Europe SA offloaded over 16,05,400 shares of gaming and hospitality firm Delta Corporation at an average price of Rs 192.56 a piece valuing the transaction size at Rs 30.91 crore, on 29th July 2022.

Lastly, the 50 EMA line is below 100 & 200 EMA, highlighting bearishness in long term. While as per the Univest app, the company has sound fundamentals and a bullish short-term trend but is bearish in long term. Therefore, if investors are wanting to invest in this stock it would be best to wait for technical indicators to turn bullish.

ABOUT THE AUTHOR

Ketan Sonalkar (SEBI Rgn No INA000011255

Ketan Sonalkar is a certified SEBI registered investment advisor and head of research at Univest. He is one of the finest financial trainers, with a track record of having trained more than 2000 people in offline and online models. He serves as a consultant advisor to leading fintech and financial data firms. He has over 15 years of working experience in the finance field. He runs Advisory Services for Direct Equities and Personal Finance Transformation.

Note – This channel is for educational and training purpose only & any stock mentioned here should not be taken as a tip/recommendation/advice

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