Delta Corp up 7%: Here's why Motilal Oswal initiates coverage with buy, expects 39% upside

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26 Aug, 2025 12:21

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Shares of gaming company Delta Corp rallied 7 percent intraday Wednesday after Motilal Oswal has initiated coverage with a buy rating as it feels approval of Daman casino could be an icing on the cake.

The company is awaiting regulatory approval for a casino housed in Daman's only five-star hotel. "Approval of the Daman casino has the potential to nearly double its gaming capacity to 3,000 from 1,700 currently. Delta would be in a better position to exploit the potential that the nascent industry offers," it says.

Given its location advantage, Daman (caters to a catchment area of 35 million people over Mumbai and Gujarat) is likely to attract higher footfalls than Goa, the brokerage house feels. It expects Delta to replicate its success in Goa's offshore casino market in the land-based casino market in Daman.

India's only listed gaming company Delta Corp has a dominant share of India's offshore casino market, with three of the six offshore casino licenses (five operational) in Goa. It has around 1,700 gaming positions in the state across its three offshore casinos, one onshore casino and recently commenced casino in Sikkim.

Given that the Goa government is unlikely to issue new licenses and that land-based casinos are allowed only in five-star hotels, Delta's competitive advantage should sustain, it believes.

Motilal Oswal feels gaming is an emerging industry in India; given its paltry size of around USD 150 million, the growth potential is huge.

Price Waterhouse Coopers (PWC) estimates the total global gaming casino market in 2015 at USD 183 billion and that it has grown at a CAGR of 7 percent over the last 10 years.

The brokerage house has set a target price for the stock at Rs 229, indicating an upside of around 39 percent over closing price on March 21, as it expects 35 percent revenue CAGR, 45 percent EBITDA CAGR and 62 percent PAT CAGR over FY17-19. EBITDA would be driven by strong operating leverage, it says.
The gaming company has also forayed into online gaming, with the acquisition of Gauss Network, which holds Adda52.com (online poker), for Rs 210 crore (part cash and part equity deal is expected to be completed by April 2017). The size of the global online gaming industry is estimated at USD 110-120 million.

Motilal Oswal believes Delta is at an inflection point. The investment phase is behind and approval of the Daman casino and M&A opportunities in online gaming (like Adda52.com) could trigger significant growth and cash generation as well as return on capital employed / return on equity improvement. It expects return on equity to improve from 9 percent to 17 percent over FY17-19.

At 11:28 hours IST, the stock was quoting at Rs 179.80, up Rs 10.65, or 6.30 percent amid high volumes on the BSE.

Posted by Sunil Shankar Matkar