Shares of Delta Corp dropped over 3% to ₹106 on January 14, 2025, reflecting investor concerns over its lacklustre Q3FY25 performance. The company's subdued quarterly results further extend its underperformance, with the stock declining over 27% in the past year compared to a 5% gain in the Nifty 50 index.
Weak financial performance in Q3FY25
Delta Corp's net profit saw a modest 3.5% year-on-year (YoY) increase to ₹35 crore for Q3FY25. However, revenue fell by 7.5% YoY to ₹194 crore, highlighting significant challenges. The company's operating performance took a harder hit, with EBITDA plunging 42.4% YoY to ₹32.2 crore. This caused EBITDA margins to contract sharply by 1,000 basis points YoY, settling at 16.6%.
The decline in performance comes amidst a broader industry challenge due to higher GST rates imposed on online gaming. While the Supreme Court has provided temporary relief by staying GST demands, concerns about long-term tax implications linger.
Exploring investment opportunities
Despite these hurdles, Delta Corp's diversified operations, spanning casinos, real estate, gaming, and hospitality, offer potential for long-term growth. The company's prominent Deltin brand operates flagship casinos like Deltin Royale, Deltin JAQK, and Deltin Caravela in Goa. For those considering investments, keeping an eye on regulatory developments and tax policies is crucial.
If you're looking to buy shares online, careful analysis of such stocks is essential, especially in industries facing regulatory headwinds.
Tax challenges for the online gaming sector
The online gaming sector has been grappling with revised GST regulations. From October 1, 2023, a 28% GST applies to the full value of bets, replacing the previous rate of 18%. This shift significantly impacts gaming companies, including Delta Corp, which faces a tax demand of ₹1.12 lakh crore across 71 firms. However, the Supreme Court's interim stay provides some breathing room for these companies as they contest the tax demands.
Summing up
Delta Corp shares fell over 3% to ₹106 in early trading on January 14, 2025, as weak Q3FY25 results dampened investor sentiment. At 8:48 AM, the stock reflected a sharp decline, marking a continuation of its underperformance, with a 27% drop over the past year compared to Nifty 50's 5% gain.
With the gaming sector navigating evolving GST policies, including the recent 28% tax rate on bets, caution is advised for those looking to buy shares online. Investors should closely monitor Delta Corp's diversified operations, spanning casinos, real estate, and hospitality, alongside regulatory updates like the Supreme Court's stay on GST demands. Careful analysis and awareness of sector-specific challenges are crucial before making investment decisions.
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