BSE SENSEX
31,646
S&P CNX
9,884
Delta Corp
CMP: INR188
TP: INR243 (+29%)
Buy
Firing on all cylinders
Gaming business stronger than ever despite demonetization
30 August 2017
Update
| Sector:
Others
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
DELTA IN
267.1
218 / 95
11/16/4
50.2
0.8
748
64.7
Financials Snapshot (INR b)
2017 2018E 2019E
Y/E Mar
Net Sales
4.5
6.8
8.7
EBITDA
1.6
2.5
3.3
PAT
0.7
1.6
2.2
EPS (INR)
3.1
5.9
8.1
Gr. (%)
125.5
92.3 37.8
BV/Sh (INR)
39.7
59.5 66.0
RoE (%)
8.1
12.5 12.9
RoCE (%)
8.7
11.9 12.9
P/E (x)
61.6
32.0 23.2
P/BV (x)
4.7
3.2
2.8
Shareholding pattern (%)
As On
Jun-17 Mar-17 Jun-16
Promoter
35.3
40.7
40.9
DII
9.5
0.5
1.1
FII
6.7
11.4
12.3
Others
48.5
47.4
45.8
FII Includes depository receipts
Stock Performance (1-year)
Delta Corp
Sensex - Rebased
230
180
130
80
Delta Corp (DELTA) has recovered strongly from the demonetization woes, as
evident from overall growth of 18.4% YoY 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 ~INR11m/month, is expected to double its revenue by FY19, reaching
turnover of ~INR225m. Furthermore, the company hinted at being at the
advanced stage of exploring opportunities in Nepal (may setup operations in
FY19 if it deems suitable) to capitalize 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% YoY in
FY18.
Footfall to multiply manifold post casino shift to land in Goa
The latest developments in Goa’s casino policy would allow offshore licensees
to set-up live onshore gaming casinos on land. DELTA plans to build the entire
ecosystem for gaming and entertainment based on an asset light model to
ensure an environment conducive for increased footfall. The company already
has land parcels across Goa, and the entire shift to land is expected to entail
capex of ~INR1.5b, with most of the development related to hospitality and
other entertainment services to be done via a tie-up route.
The setting up of an entire ecosystem focused on entertainment would
significantly boost tourism and garner more investments along with increasing
the scale of business by providing DELTA’s casinos exposure to a larger set of
potential visitors.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Niket Shah – Research Analyst
(Niket.Shah@MotilalOswal.com); +91 22 6129 1535
Aksh Vashishth – Research Analyst
(Aksh.Vashishth@MotilalOswal.com); +91 22 6129 1553

Delta Corp
Complete basket of online gaming planned – focus on Poker, Rummy and
Fantasy League
DELTA, after acquiring Adda52, plans to go all-out in positioning itself as an
integrated online gaming platform. Already having a strong presence in poker
across India, the company now plans to ramp-up its rummy business. Rummy, as
of now, is a south-centric market, which the company plans to grow in other
states. DELTA has already established its office for rummy in Bangalore with 13
employees, which would go up to 20 by September 2017. The company has
launched rummy on android, with plans on track to also release the game on
iPhone by December 2017.
To offer a complete basket, DELTA plans to venture into its own fantasy league
by January 2018. The focus would be to improve software, develop strong back-
end support and call center for online gaming by 3QFY18, post which the
company is expected to expedite the advertisement and promotion of Adda as
an integrated online gaming platform.
Rummy currently contributes ~3% of Adda52’s revenue. With DELTA’s increased
focus on marketing and development, its share is expected to go up to 8% in
FY18 (from a current run rate of INR6m/month to INR15m/month post ramp-
up). The company is also actively exploring options for acquisitions in the same
space, which should further boost rummy’s contribution. Adda52’s overall
performance is expected to be aided by healthy growth of ~30% in FY18 in the
poker business, coupled with significant ramp-up of the rummy business. DELTA
plans to plough the gains from Adda52 back into marketing and advertisement
of both the poker and rummy businesses. We believe that the online gaming
business is at an inflection point, and should see J-curve growth, going forward.
With DELTA’s strong balance sheet and synergies with offshore casinos, we
believe it is well positioned to take advantage of the increased traction in online
gaming. We expect growth rates to remain in excess of 30% for the next few
years, driving growth and RoCE/RoE.
Valuation and view
DELTA is ideally placed to benefit on all fronts, in our view. The company is
expected to witness significant growth from the online gaming business as it
ramps up rummy. Besides this, the casino policy change in Goa, as well as the
commencement of airport in Sikkim, would put DELTA in a sweet spot to benefit
from a manifold increase in number of visitations.
We thus upgrade our earnings estimate for FY18 and FY19 by 5% and 3%,
respectively. We expect the company to deliver sales/PAT CAGR of 38%/75%
over FY17-19E, and value the stock at 30x FY19E EPS to arrive at a target price of
INR243. Maintain
Buy.
30 August 2017
2

Delta Corp
Story in charts
Exhibit 1: Revenues to post 33% CAGR over FY17–20E
Revenue (INR m)
31.3
25.1
21.2
Growth(%)
50.1
27.1
22.6
26.9
-46.3
5,586
FY14
3,000
FY15
3,752
FY16
4,547
FY17
6,827
FY18E
8,675
FY19E
10,637
FY20E
1,501
FY14
665
FY15
1,206
FY16
1,640
FY17
22.2
2,505
3,296
4,148
Exhibit 2: Margins to expand 290bp over FY17-20E
EBITDA (INR m)
32.2
36.1
Margins (%)
36.7
38.0
39.0
FY18E
FY19E
FY20E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: PAT to post 58% CAGR over FY17–20E
Adjusted PAT (INR m)
64.7
-134.2
-311.5
432
-148
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
312
707
1,554
2,161
2,775
126.5
119.7
Growth(%)
39.1
28.4
Exhibit 4: Adda52 to post 69% revenue CAGR over FY17-20E
93%
Revenue (INR m)
Growth %
92%
67%
54%
34%
50%
182
FY14
352
FY15
470
FY16
724
FY17
1206
FY18E
2316
FY19E
3474
FY20E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 5: RoEs set to improve…
RoE(%)
Exhibit 6: …and so is RoCE
RoCE(%)
5.6
-1.9
FY14
FY15
3.9
8.1
12.4
12.9
14.8
11.9
12.9
20.8
7.7
5.8
FY15
8.7
FY17
5.6
FY16
FY16
FY17
FY18E
FY19E
FY20E
FY14
FY18E
FY19E
FY20E
Source: MOSL, Company
Source: MOSL, Company
30 August 2017
3

Delta Corp
Financials and Valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Less: Mionrity Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY14
5,586
31.3
4,085
73.1
1,501
26.9
166
1,335
334
312
1,313
-143
1,170
478
42
44.4
297
353
432
64.7
7.7
FY15
3,000
-46.3
2,334
77.8
665
22.2
347
318
513
74
-120
-49
-169
155
-47
-64.1
-50
-228
-148
-134.2
-4.9
FY16
3,752
25.1
2,545
67.8
1,206
32.2
359
847
413
70
503
105
608
202
0
33.2
24
382
312
-311.5
8.3
FY17
4,547
21.2
2,907
63.9
1,640
36.1
361
1,278
350
49
978
-42
1,020
280
27.4
2
738
707
126.5
15.6
FY18E
6,827
50.1
4,321
63.3
2,505
36.7
423
2,083
100
210
2,193
0
2,193
636
29.0
3
1,554
1,554
119.7
22.8
FY19E
8,675
27.1
5,378
62.0
3,296
38.0
501
2,795
0
252
3,047
0
3,047
884
29.0
3
2,161
2,161
39.1
24.9
(INR M)
FY20E
10,637
22.6
6,489
61.0
4,148
39.0
539
3,610
0
302
3,912
0
3,912
1,135
29.0
3
2,775
2,775
28.4
26.1
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Preference Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Deferred Tax assets
Misc Expenditure
Appl. of Funds
FY14
228
0
7,529
7,757
525
57
3,524
11,863
7,611
488
7,123
477
992
1,048
3,291
717
674
551
1,350
1,142
730
413
2,149
72
0
11,863
FY15
231
0
7,420
7,651
244
160
3,372
11,426
8,739
800
7,938
604
38
1,077
2,459
695
228
210
1,326
911
735
176
1,548
221
0
11,426
FY16
231
0
8,123
8,354
270
0
2,428
11,051
8,508
1,160
7,348
1,258
27
826
2,100
708
142
228
1,023
899
806
93
1,201
391
0
11,051
FY17
232
0
8,970
9,202
160
0
2,210
11,572
8,715
1,521
7,194
1,327
5
981
2,715
695
43
314
1,663
1,000
906
95
1,715
351
0
11,572
FY18E
267
0
15,617
15,884
160
0
0
16,045
11,445
1,944
9,501
1,327
5
981
5,874
991
187
2,782
1,913
1,994
1,290
703
3,880
351
0
16,045
FY19E
267
0
17,360
17,628
160
0
0
17,788
12,445
2,445
10,000
1,327
5
981
7,650
1,260
238
3,953
2,200
2,526
1,664
862
5,124
351
0
17,788
(INR M)
FY20E
267
0
19,685
19,952
160
0
0
20,112
13,246
2,984
10,262
1,327
5
981
10,239
1,574
291
5,844
2,530
3,052
2,069
983
7,186
351
0
20,112
30 August 2017
4

Delta Corp
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Debt/Equity
FY14
1.9
2.6
34.1
0.2
18.8
98.4
71.2
5.5
8.3
30.8
0.1
6.8
5.6
7.7
8.9
0.5
47
44
48
43
0.5
FY15
-0.6
0.9
33.2
0.1
-12.5
-292.1
216.6
5.6
15.5
69.9
0.1
3.2
-1.9
5.8
5.4
0.3
85
28
89
23
0.4
FY16
1.4
2.9
36.2
0.2
14.5
138.1
64.2
5.2
12.1
37.7
0.1
4.6
3.9
5.6
5.6
0.3
69
14
78
4
0.3
FY17
3.1
4.6
39.7
0.4
13.2
61.2
40.5
4.7
9.9
27.6
0.2
4.0
8.1
8.7
9.2
0.4
56
3
73
-13
0.2
FY18E
5.9
7.5
59.5
1.2
24.6
32.0
25.2
3.2
6.9
18.9
0.6
-2.1
12.5
11.9
13.1
0.4
53
10
69
-6
0.0
FY19E
8.1
10.0
66.0
1.3
19.3
23.2
18.9
2.8
5.3
14.0
0.7
5.0
12.9
12.9
15.8
0.5
53
10
70
-7
0.0
FY20E
10.4
12.4
74.7
1.4
16.2
18.1
15.2
2.5
4.2
10.7
0.7
7.6
14.8
20.8
0.5
54
10
1,092
46
0.0
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY14
1,175
166
199
-332
1,119
2,327
-49
2,278
-740
1,538
132
1,257
650
22
-1,158
-310
-57
-1,340
-2,843
84
466
551
FY15
-166
347
495
-354
539
862
-23
838
-107
731
3
-145
-250
145
-152
-551
-62
-309
-929
-341
551
210
FY16
596
382
397
-156
94
1,313
-156
1,157
-89
1,068
32
-63
-120
0
-524
-427
-28
-40
-1,018
18
210
228
FY17
978
361
300
-280
-427
932
180
1,112
-185
927
-155
49
-290
1
-218
-350
-98
-72
-736
86
228
314
FY18E
2,213
423
-130
-642
303
2,167
0
2,167
-2,730
-563
0
210
-2,520
5,500
-2,210
-80
-386
-3
2,821
2,469
314
2,782
FY19E
3,047
501
-252
-884
-74
2,339
0
2,339
-1,000
1,339
0
252
-748
0
0
0
-418
-3
-421
1,170
2,782
3,953
(INR M)
FY20E
3,912
539
-302
-1,135
-171
2,843
0
2,843
-801
2,042
0
302
-499
0
0
0
-450
-3
-453
1,891
3,953
5,844
30 August 2017
5

Disclosures:
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Delta Corp
Disclosure of Interest Statement
Analyst ownership of the stock
Delta Corp
No
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Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is
not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S.
persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional
investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following
representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person
or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of
offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or
appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations
as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative
products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time
without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities
mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities
functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is
being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not
directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would
be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to
certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or
representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The
person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or
employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this
information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231;
MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset
Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities
Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
30 August 2017
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