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Delta Corp Eyeing IPO On Online Division After Best Ever Quarter

Posted by : Siddharth Jalan on | Feb 05,2022

The Casino Operator Reports Highest Ever Quarterly Performance

The first fully operational quarter for Delta Corp after the second wave of Covid-induced restrictions cleared away proved a record breaker in terms of revenues generated with the company reporting Q3 FY 2022 highest ever consolidated net sales of ₹247.22 crore. Hardik Dhebar, Delta Corp CFO answered questions about the casino operator’s financial results, current trends and plans for the future in an interview with BloombergQuint’s Niraj Shah.

A more detailed look into Delta Corp’s performance for the quarter that ended on December 31, 2021, reveals a 104.62 percent year on year (YoY) rise in consolidated net revenues over the ₹120.82 crore achieved in the third quarter of the previous fiscal year.

EBITDA and net profit figures showed even greater YoY growths over the ₹19.85 crore and ₹1.28 crore respectively registered in Q3 FY 2021. The company’s earnings before interest, taxes, depreciation, and amortization increased with 465.09 percent to ₹112.17 crore for Q3 FY 2022 and the net profit jumped by an impressive 5,398.44 percent to ₹70.38 crore. Similarly, the earning per share (EPS) rose by 5,180 percent to ₹2.64 from ₹0.05 one year ago.

Online Division IPO to Fund Ambitious Investment Programme
CFO Hardik Dhebar talked about Delta Corp’s ambitious investment program to build a new “gaming city” and to replace one of the smaller floating casinos owned by the group with a two-and-a-half-times larger vessel to increase overall gaming capacity. The company intends to build a “dedicated war chest” for the purpose of funding these projects through an initial public offering (IPO) of Delta’s online division.

The intended IPO will include sales by some of the current shareholders as well as issuing of fresh stock. Mr. Dhebar expects the draft prospectus to be filed during the first half of the upcoming fiscal year which starts in April. The investment projects will require between ₹1,700 and ₹2,000 crore (roughly $221 to $260 Mn) and if implemented according to plan, Delta Corp will remain free of debt at the end, as per the words of the company’s chief financial officer.

High Footfalls After Reopening of Casinos in Goa Brought Optimism
The second wave of Covid-19 hit India hard in the spring of 2021 and casinos in the state of Goa were ordered to close together with many other businesses. For many months online roulette and similar games in cyber space were the only options available to casino enthusiasts, but on September 20 the green light to resume operations was finally given to offline gaming houses and vessels in Goa. Soaring footfalls immediately after reopening brought a 13 percent raise in Delta Corp stock value to a 52-week high and fueled optimism among company management.

Delta Corp business is not confined to Goa’s casino market, as it operates gambling establishments and hospitality facilities in the state of Sikkim and in Nepal’s capital Kathmandu, but the vast portion of its revenues are generated in Goa where the company has three of the six water-based casino licenses and one land-based casino.

Shortly after the resumption of operations, the company’s CFO announced a plan to raise anywhere between $30 to $50 Mn to be used to expand Delta Corp’s footprint in the online casino and RMG segment. The operator has strong positions in online poker through its Adda52 platform and its rummy outlet - Adda52Rummy is also not to be underestimated with its revenues of more than ₹1 crore per month. Now Delta Corp wanted to move beyond that and invest in new platforms for real money online blackjack and other casino games and fantasy sports.

Delta Corp Expects Las Vegas-Style All-Day Gaming Culture Soon
In the renowned casino capitals of the world like Las Vegas, Hong Kong and Singapore, gaming establishments are busy 24 hours day and night. The casinos in Goa are also open around the clock, but they actually have business only half of the time during the nights.

"Now people have started coming in early because there are (Covid) restrictions,” says Delta Corp CFO Dhebar, while before the coronavirus pandemic customers used to flock in only after 7:30 to 8 p.m. According to him, it is imminent that a similar  “culture (of daytime gaming) to develop over a period of time” in India.