Quarterly Results Q3 FY2024-25 : Delta Corp

 

Analysis of Delta Corp Quarterly Results (Quarter Ending December 2024)

1. Revenue

• Standalone Revenue: ₹159.16 crores, marginal growth from ₹155.70 crores YoY (+2.22%), but a slight decline QoQ from ₹161.06 crores (-1.18%).
• Segment-wise Revenue (Consolidated):
  • Gaming Operations: ₹175.44 crores, down YoY (-3.36%) and QoQ (-1%).
  • Online Skill Gaming: ₹45.45 crores, a strong YoY increase of 16.14% and QoQ growth of 9.16%.
  • Hospitality: ₹14.38 crores, stable YoY (+4.66%) and significant QoQ growth (+47.88%).
• Total consolidated net revenue: ₹206.99 crores, reflecting a drop from ₹222.86 crores YoY (-7.12%) but steady QoQ.

2. Profitability

• Standalone Profit Before Tax: ₹54.41 crores, up YoY (+1.64%) but declined QoQ (-6.79%).
• Consolidated Profit After Tax: ₹35.73 crores, a slight increase YoY (+3.39%) but lower than the previous quarter (₹26.98 crores).
• Exceptional items and increased cost control improved net margins, though tax-related adjustments impacted reported profits.

3. Margins

• Gross margin improvement due to higher efficiencies in the online gaming segment.
• Consolidated EBITDA margins are stable due to expense containment in the hospitality and gaming divisions.
• Net margins were impacted by deferred tax benefits leading to a consolidated tax credit of ₹6.31 crores.

4. Key Financial Metrics

• EPS (Standalone): ₹1.55 (flat YoY and QoQ).
• EPS (Consolidated): ₹1.33, indicating a strong recovery in online gaming profitability.
• Employee benefit costs remained consistent at ₹25.40 crores (Standalone).

5. YoY and QoQ Trends

• Decline in overall gaming revenue, primarily attributed to the casino gaming segment’s subdued performance.
• Robust growth in online skill gaming, showing potential as a driver of future growth.

6. Comparison with Analyst Expectations

• Revenue is slightly below market estimates due to weaker-than-expected gaming operations.
• Profits align with estimates, reflecting strong cost discipline and tax adjustments.

7. Key Influencing Factors

• Macroeconomic pressures, including inflation and reduced discretionary spending, affected casino revenues.
• Increased focus on digital platforms bolstered online skill gaming.
• GST show-cause notices amounting to ₹23,207.30 crores remain a major overhang, though management is confident of a favorable resolution.

8. Management Commentary

• Confident about legal resolutions in GST-related disputes.
• Approved a Revised Composite Scheme of Arrangement, expected to streamline operations post-April 2025.

Conclusion

Delta Corp's performance reflects resilience amidst headwinds, with a promising trajectory in online gaming. However, the GST-related liability and sector-specific challenges in the gaming industry warrant cautious optimism. Investors may consider holding the stock for its long-term growth potential in the digital gaming space while monitoring regulatory developments.