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Buy Delta Corp; target of Rs 304: Motilal Oswal

July 10
16:25 2019

Motilal Oswal ‘s research report on Delta Corp

DELTA’s revenue came in flat YoY at INR1,865m (our estimate: INR1,925m) in 1QFY20. Casino revenue increased 3% YoY – we note that growth would have been higher if not for the maintenance work at its vessel Deltin JAQK in dry dock for 19 days, due to which the segment incurred a revenue loss of ~INR190m. Online revenue declined by 9% to INR356m. EBITDA margin expanded 70bp YoY to 36.3% YoY (our estimate: 34.9%). PAT came in flat YoY at INR425m (in-line).

Outlook

However, management clarified that it has not received any GST notice, while comments on closure of casinos have been countered and invalidated by authorities via media. Thus, we maintain our estimates of sales/PAT CAGR of 14%/19% over FY19-21. We continue valuing the stock at 30x P/E to arrive at a target price of INR304/share. Maintain Buy.

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