Indian Gaming industry would expand multifold post Goa’s casino policy (expected soon). It would allow 6 offshore licensees to set - up live onshore gaming casinos on land. DELTA will be the biggest beneficiary as it has 3 licenses out of these. We raise our TP by 54 % to Rs411 as we roll forward to FY20 earnings. We value the stock at a PER of 35x FY20E. We believe this is justified given the potential from new policy. None of the benefit s are factored into our forecasts as yet. Indian gaming industry could exceed 10,000 footfalls/day from current 1,500 footfalls/day. DELTA plans to build the entire ecosystem for gaming and entertainment from internal cash flows. 3Q net of Rs446m increased 320% YoY and 3% QoQ. It exceeded our expectations by 13% due to better footfalls in Goa casinos. Margins were slightly off estimate due to high marketing costs. A few of these costs were one - time which would boost footfalls in FY19.
OutlookWe continue to like DELTA as a gaming play in India. At 27.6x FY20E PER currently, valuations are undemanding for a growth stock with expected 2 - year earnings CAGR of 40%
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