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Motilal Oswal
Delta Corp (Buy)
CMP: ₹193.80
Target: ₹243
Delta Corp (Delta) has recovered strongly from the demonetisation woes, as evident from overall growth of 18.4 per cent y-o-y in 1QFY18. This quarter too has so far witnessed phenomenal growth in the number of visitations on account of a relatively high number of holidays in the months of July and August. To sharpen its focus on retail footfall, the company has converted a floor dedicated to club members of Deltin Royale to mass access to accommodate growing incremental visitors. This, in turn, significantly increases the prospects of doubling retail revenue from Deltin Royale.
The new airport at Sikkim is expected to commence operations from November 2017, post which the number of travellers is expected to increase manifold as commuting becomes less time-consuming and easier. Consequently, visitations at the Sikkim casino should increase markedly, benefiting the gaming business. The Sikkim casino, which operates at revenue of about ₹1.1 crore /month, is expected to double its revenue by FY19, reaching
turnover of ₹22.5 crore. Furthermore, the company hinted at being at the advanced stage of exploring opportunities in Nepal (may set up operations in FY19 if it deems suitable) to capitalise on increasing tourist arrivals in that country.
Overall, with growth in the Goa casino back on track and visitations in Sikkim set to gain traction, the gaming business is expected to grow at 53 per cent y-o-y in FY18.
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