Emkay Global Financial Services has given a buy recommendation on Delta Corp with a target price of Rs 365.
Shares of Delta Corp traded at Rs 164.8 around 12:50 pm on 10 July, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
Investment rationale-
Casino revenues optically soft, but big picture intact
Gross casino revenues stood at Rs 180 crore, up 3 per cent year-on-year (YoY) but down 9 per cent quarter-on-quarter (QoQ).
However, adjusting for the impact from the loss of revenue on account of the maintenance of a ship and elections, DELTA is on course of quarterly revenue above Rs 200 crore on a steady-state from the casino business.
The casino segment reported an Ebitda margin of 43 per cent, which is flat YoY despite the revenue loss and should report 48-50 per cent margins on a steady-state basis.
Online gaming margin to normalize at 15 per cent
First quarter performance in the online gaming business was subdued due to increased advertisement, sales and promotional spends (AS&P) of Rs 4.7 crore in games – Poker and Rummy.
Gross gaming revenue stood at Rs 35.6 crore, down 9 per cent YoY due to the overall slowdown which is expected to reverse given the end of the Indian Premier League and the about-to-conclude ICC World Cup.
Online Ebitda margin declined 206bps to 14 per cent in the first quarter due to high ad spends. "Q1 overall earnings per share (EPS) of Rs 1.54 forms 18 per cent of our FY20 estimate," said the brokerage.
As per the brokerage, DELTAsRead More – Source
[contf] [contfnew] 
ET Markets
[contfnewc] [contfnewc]
