Delta Corp LtdQ1 FY22Leisure Services

Delta Corp Ltd

Q1 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue 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.

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.

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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.

Order book

The transcript provided from Delta Corp Limited's Q4 FY22 earnings call does not mention any details regarding current or expected order book or pending orders. The discussion primarily focuses on: - Business performance impacts from COVID-19 and election code restrictions. - Casino operations and capacity expansions with replacement of vessels. - Plans for IPO of online gaming subsidiary (Deltatech Gaming Pvt Ltd). - Discussions on license fees and regulatory environment. - Growth outlook for online gaming and land-based casinos. No information about orderbook, pending orders, or similar terms related to procurement or project backlog is provided in the transcript.

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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