Delta Corp Ltd Q4 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- Post normalization of activities, Delta Corp expects to be back on the growth trajectory seen in Q3 FY22.
- April 2022 visitation and revenue trends are strong and encouraging, supporting growth optimism.
- The IPO of the online gaming vertical aims to create a war chest for aggressive marketing, sales promotion, and customer acquisition, driving future growth.
- Online gaming growth is expected with the multi-gaming platform funnel strategy attracting more users and converting them to poker.
- Casino capacity will increase significantly with a new ship adding 2.5 times current gaming positions and an additional 1,500 positions upon land-based casino launch.
- The company believes the market size is large with potential for a tenfold increase in casino visitation in Goa.
- Normalization of COVID-related restrictions and support from robust hospitality business will further aid revenue growth.
- No major disruptions expected, enabling steady growth in the coming financial year.
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Fundraise plans
Yes- Delta Corp has approved an IPO for its online gaming business (Deltatech Gaming Private Limited) to create a dedicated war chest for marketing, sales promotion, and customer acquisition.
- The company is working with intermediaries and partners on the IPO process, with regulatory filings and documentation underway to get it listed soon.
- No specific mention of new debt fundraising was made during the call.
- The IPO aims to raise primary capital and includes an Offer for Sale (OFS) as well.
- This separate listing strategy is intended to enable focused growth and better utilization of funds for the online gaming vertical, which previously faced Delta overhang.
- Overall, the primary equity fundraising effort is through the planned IPO of the online gaming subsidiary.
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Capex plans
Yes- Replacement of an existing smaller ship with a larger vessel expected to be operational by Q2/Q3 calendar year 2024, increasing gaming capacity by about 2.5 times.
- Development of a 100-acre land-based casino and integrated resort project in Goa, expected to take approximately 48 months (4 years) to complete.
- The land-based casino and the new ship are independent projects planned to run parallelly.
- Approval for the 100-acre project has been obtained from the cabinet; awaiting official communication to commence work.
- Planned strategic growth in online gaming through IPO of Deltatech Gaming Private Limited to raise a war chest for marketing, customer acquisition, and expansion.
- No changes in casino policy currently; ongoing discussions for new market entry in other states but no concrete outcomes yet.
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Margin guidance
Category 3- Delta Corp expects to continue on the same growth trajectory as in Q3 FY22, with recovery in visitation and revenue seen in April.
- Normalization post-COVID challenges and elections is anticipated to support stable growth without disruptions.
- Online gaming growth is expected to accelerate once funded via IPO, focusing on customer acquisition, though profitability will take time due to upfront burn.
- The new larger vessel (replacement) will increase capacity by ~2.5 times, potentially improving revenue and profits, with dry docking a possible short-term disruption.
- Land-based casino development is planned over 4 years, expected to create additional revenue streams and employment.
- EBITDA margins are expected to normalize post-revenue catch-up, as operating leverage benefits kick in.
- The company is optimistic about good growth and strong set of numbers in the coming financial year, barring unforeseen disruptions.
Order book
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What Delta Corp Ltd's management said in earlier quarters
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