Emkay maintained a buy call on the stock with a target price at Rs 365, implying 116 percent potential upside from current levels
Shares of gaming and real estate company Delta Corp fell 3 percent intraday on July 9 after muted performance reported by the company in quarter ended June 2019.
Its profit in Q1 grew 2.7 percent to Rs 42 crore and operating profit increased 1.5 percent to Rs 67.7 crore compared to the same period last year.
The slow profit growth was due to the revenue loss from the dry-docking of Deltin Jaqk casino and the restriction on alcohol serving in Goa due to the general elections. The online business' performance was subdued due to high advertising, selling and promotion spend.
Margin during the quarter expanded 70 basis points to 36.3 percent year-on-year, but revenue from operations was flat at Rs 187 crore compared to year-ago.
Adjusting for the revenue loss in Goa, the company could have achieved casino revenue above Rs 200 crore in Q1, said Emkay that is confident of full-year earnings growth of 22 percent for Delta as casino revenue should recover sharply in the coming quarters.
The brokerage expects the momentum to continue in Goa, driven by rising footfalls and improving gross gaming revenue.
Emkay maintained a buy call on the stock with a target price at Rs 365, implying 116 percent potential upside from current levels.
"Rating is underpinned by a strong EPS CAGR of 28 percent over FY19-21E. Catalyst from clarification on GST taxation for the gaming industry is expected soon," the brokerage said.The stock was quoting at Rs 165.10, down Rs 3.65, or 2.16 percent on the BSE at 1112 hours IST.