2QFY20 Results Update | Sector: Others
15 October 2019
Delta Corp
Buy
BSE SENSEX
38,506
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
11,428
DELTA IN
268
46.3 / 0.6
278 / 116
-9/-30/-35
304
67.2
CMP: INR171
TP: INR254 (+49%)
Online sweetens the pot; op performance intact
Revenue flat; EBITDA margin expands marginally:
Revenue came in flat YoY
at INR2,008m (our estimate: INR2,059m) in 2QFY20, while the EBITDA
margin expanded 140bp YoY to 40.5% (our estimate: 37.5%), primarily
driven by a multifold expansion in the online business profitability (+2,150bp
YoY to 31%). PBT declined 3% YoY to INR748m (our estimate: INR715m). Adj.
PAT grew 22% YoY to INR585m (our estimate: INR540m). For 1HFY20, sales
were flat YoY, while EBITDA/adj. PAT increased 3%/12% YoY.
Online drives growth; Casino marred by competition, general slowdown:
Casino revenue declined marginally by 1% YoY to INR2,002m, while the
segmental EBIT margin contracted 370bp YoY to 32.8%. Increased market
capacities by ~20%, general slowdown, extended monsoon and the taxi
strike were the key reasons impacting visitation growth. Margin
compression can be attributed to higher spend on offerings/deals to drive
visitations. On the other hand, online revenue increased 17% YoY, driven by
a boost from higher promotional spend in the prior quarter. However, such
incremental spend were avoided in 2QFY20, leading to improved
profitability. We expect the online margin to sustain at ~20% as DELTA
attempts to stay competitive.
th
Key takeaways:
(a) Hearing of Daman writ petition is scheduled on 14
Nov’19. (b) Land policy is likely to be taken up in the winter session. (c)
Clarity on GST taxation is likely to emerge soon.
Valuation and view:
Post a sharp correction, the stock is now attractively
valued at 17x FY21E EPS. While the GST-related hangover remains, the
operational performance is intact and will likely continue improving hereon.
We largely maintain our estimates and expect sales/EBITDA/adj. PAT CAGR
of 11%/12%/19% over FY19-21. We value the stock at 25x FY21E EPS to
arrive at a target price of INR254. Maintain
Buy.
FY20E
2Q
3QE
2,008 2,287
0%
11%
1,195 1,361
814
926
40.5
40.5
120
122
11
10
65
70
748
864
-7
0
755
864
166
216
22.0
25.0
2
4
590
652
585
652
22%
27%
29.1
28.5
FY19
4QE
2,367
16%
1,406
961
40.6
123
9
70
899
0
899
225
25.0
2
676
676
24%
28.6
7,978
31.3
4,791
3,187
39.9
377
18
313
3,105
-43
3,148
1,141
36.3
39
1,968
1,940
25.3
24.3
FY20E
8,526
6.9
5,149
3,377
39.6
474
40
287
3,150
-7
3,157
824
26.1
-11
2,344
2,339
20.5
27.4
Financials & Valuations (INR b)
2019 2020E
Y/E March
8.0
8.5
Net Sales
3.2
3.4
EBITDA
1.9
2.3
NP
7.2
8.6
EPS (INR)
23.8
20.5
EPS Gr. (%)
71.7
79.8
BV/Sh. (INR)
10.7
11.4
RoE (%)
11.0
15.5
RoCE (%)
6.6
6.3
Payout (%)
P/E (x)
23.9
19.8
P/BV (x)
2.4
2.1
EV/EBITDA (x)
12.9
12.2
Div. Yield (%)
0.2
0.3
2021E
9.9
4.0
2.8
10.2
17.9
89.4
12.0
16.5
5.3
16.8
1.9
10.3
0.3
Estimate change
TP change
Rating change
Consolidated - Quarterly performance
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO exp.
Extra-Ord expense
PBT
Tax
Rate (%)
MI & P/L of Asso. Cos.
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
1Q
1,873
46%
1,206
667
35.6
94
2
83
654
0
654
228
34.9
-3
423
423
100%
22.6
FY19
2Q
3Q
2,011 2,052
38%
27%
1,225 1,197
786
855
39.1
41.7
94
95
7
6
83
55
768
810
0
11
768
799
274
296
35.6
37.0
-13
2
481
505
481
512
11%
14%
23.9
24.9
INR million
2QE
2,059
1,287
772
37.5
112
10
65
715
0
715
179
25.0
4
540
540
12%
26.2
Var
%
-2
4Q
2,043
19%
1,164
879
43.0
95
3
92
875
-37
911
344
37.8
0
567
544
19%
26.6
1Q
1,865
0%
1,188
677
36.3
110
10
82
640
0
640
217
33.9
2
425
425
0%
22.8
5
301bp
5
8
288bp
Chintan Modi- Research analyst
(Chintan.Modi@MotilalOswal.com); +91 22 6129 1554
Alpesh Thacker- Research analyst
(Alpesh.Thacker@motilaloswal.com); +91 225036 2561
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.