Delta Corp Ltd Q2 FY20 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
No
Order
N/A
Capex
Yes
1 of 4 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Management expects annualized growth of 15% to 20% over the next 3-5 years, reflecting historical compounded growth rates.
- Recent capacity additions and market expansion indicate potential for increased revenues.
- Post-Diwali seasonal uptick anticipated, with subdued activity during festive week but overall growth towards Nov-Dec.
- Online gaming targeted to grow 20%-25% YoY, with plans to acquire 40,000-60,000 new customers, driven by poker focus.
- Offline business remains the “lion’s share” and is expected to grow steadily.
- New onshore casino development with increased capacity (6-7 times current) planned, involving Rs 1000-1200 crore investment, to boost future volumes and revenues.
- Seasonal and economic factors may cause quarter-to-quarter fluctuations, but management confident of restoring growth momentum beyond current base.
See what Delta Corp Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
No- Delta Corporation does not anticipate needing to borrow any funds for its upcoming onshore casino project.
- The total project cost is estimated at INR 2000-2200 crores, with Delta planning to invest INR 1000-1200 crores including land and infrastructure.
- As of October 14, they have INR 415 crores cash on hand and generate about INR 300 crores of EBITDA yearly, which approximates to cash flow.
- Over the next 4 years, cash generation plus existing liquid assets (~INR 400 crores) total about INR 1600 crores.
- This internal accruals and asset monetization is sufficient to fund the project without any debt or equity fundraising.
- No mention was made of new equity fundraising during the call.
See what Delta Corp Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Total project cost for onshore development estimated at ₹2,000-2,200 crores.
- Delta plans to invest ₹1,000-1,200 crores in land and infrastructure for the new project.
- Development includes a 200-300 room hotel and approximately 400,000 sq. ft. gaming space.
- Additional facilities like employee quarters, surveillance, and back-office setups to be built.
- Existing CAPEX spent around ₹29 crores in H1 FY20 on land parcels, plant & machinery, Nepal casino upgrades, and software updates for online business.
- No external borrowing planned; investments to be funded through cash reserves (~₹415 crores) and internal accruals (₹300 crores EBITDA annually).
- Increase in gaming capacity by 20-25% with introduction of new vessels (Big Daddy and Pride).
- Focus on growing online segment with target 20-25% revenue growth.
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