Indian gaming giant Delta Corp reported net revenues of INR2.22 billion (US$33.4 million) in the three months to 31 March 2018, an increase of 64% year-on-year and 6% sequentially thanks to strong results from its floating casino operations.
Income from the company’s casino operations grew 73% from INR947 million to INR1.64 billion (US$24.7 million), providing plenty of upside for Delta Corp in the face of ongoing delays in legislation that would see its riverboats moved to land.
In a note, Union Gaming’s Head of Asia Equity Research, Grant Govertsen, said, “The biggest impediment to growth in the out years will be a lack of physical space to accommodate customers given that riverboat casinos have a finite amount of space.
“It is this reason that the move to onshore is so important for the company and for the shares. We are forecasting casino revenue growth of 26%, 22% and 18% growth from FY19 to FY21. By FY22 we expect the company to begin land-based casino operations via India’s first IRs.”
Delta Corp also enjoyed strong growth from its online gaming operations, particularly online poker, up 18% sequentially to INR335 million (US$5 million) after the company acquired the popular Adda52 site last September.
EBITDA grew 109% year-on-year to INR759 million.
Govertsen said there was also some upside for Delta Corp to the current situation surrounding license fees after the government announced a massive increase last month, with some fees climbing by as much as 4.5 times.
“Shares have largely recovered from their decline in the immediate aftermath of the Goa government’s announced policy to substantially increase annual license fees and the industry is now moving forward with a joint effort to appeal for a rollback (or partially rollback),” he said.
“This is ongoing and there is no further clarity today. We had already adjusted our estimates to account for the new fee structure, so any movement would represent upside to our model. We think Delta comes out on the other side in better shape – either the fees will decline or some number of competitors will not survive and Delta will be the natural share gainer as it captures displaced customers.”
