Expert view and Target price of Delta Corp shares: Are Goa Casinos a Good investment opportunity?

delta-corp-actionDelta Corp Limited is an Indian real estate, gaming and hospitality corporation that owns and operates over eight casinos and hotels under several brands.Delta Corp is a public company listed on the Bombay Stock Exchange (BSE) and National Stock Exchange of India Limited (NSE). It runs major of the casinos on the offshore of Panaji, Goa. The company operates casinos in three Indian states; Goa, Daman and Sikkim.




Before we begin our equity valuation of Delta Corp; it is important to observe the facts, economy, industry outlook, financials, past performance and competitive advantages. After analysis, each section will form assumptions leading to our valuation.

  1. Delta Corp is the largest gaming company in India.
  2. The Company Operates casinos in three Indian States: Goa, Daman and Sikkim.
  3. Deta Corp owns three offshore casinos in Goa namely Deltin Royale, Deltin JAQK, Deltin Caravela, making it a dominant player in Goa.
  4. In March 2014, the company launched THE DELTIN an INR 400 crore property which is India’s largest integrated casino resort in Daman.
  5. In July 2016, the company acquired temporary license to operate casinos in Gangtok, Sikkim.
  6. Rakesh JhunJhunwala is an investor and also on the board of directors of the enterprise.
  7. There has been a change in company strategy from before. The Hotels business is meant to complement the casino and gaming business. Previously Delta Corp was focused and considered itself a real estate company.




Gambling in India is heavily restricted except for selective categories including lotteries and horse racing. In the 21st century, more people have started making cash bets upon prohibited betting and gambling activities in India. The critics of gambling claim that it leads to crime, corruption and money laundering while those in favour of a regulated gaming system in India argue that it can be a huge source of revenue for the state. Casinos in Goa contributed Rs. 135 crores to the state revenue in 2013

Only three states allow casinos, Goa , Daman and Sikkim. There are two casinos in Sikkim called Casino Sikkim and Casino Mahjong and 10 in Goa, of which six are land based and four are floating casinos that operate on the Mandovi River. The floating casinos in Goa are Casino Deltin Royale, Casino Deltin Jaqk, Casino Pride and Casino Pride 2. While the first two are controlled by the Deltin Group, the latter two are managed by the Pride Group. According to the Goa, Daman and Diu Public Gambling Act, 1976 casinos can be set up only at five star hotels or offshore vessels with the prior permission of the government. This has led the Deltin Group to open the first land based Casino in Daman which is set to begin soon. News reports also suggest that Visakhapatnam is also being looked on as the next casino destination.


Assumption 1: Entry Barriers to the Industry are high with the government not easily granting new licenses.

Tourism in India :


The operations of Delta Corp are significantly linked to the Tourism in India. This is because of the fact that it operates in Goa , Daman and Sikkim and economy of all three of these states is based on tourism income.The World Travel & Tourism Council calculated that tourism generated₹8.31 lakh crore (US$120 billion) or 6.3% of the nation’s GDP in 2015 and supported 37.315 million jobs, 8.7% of its total employment. The sector is predicted to grow at an average annual rate of 7.5% to ₹18.36 lakh crore (US$270 billion) by 2025 (7.2% of GDP).


Assumption 2: The Indian Tourism Industry will grow at 7.5 – 8% per Year.


Existing Capacity:


The existing capacity oF Delta Corps Gaming operations is 1565 gaming positions. Gaming positions of 1565 mean that 1565 people can be seated on gambling tables or slot machines in the Deltin casinos.

To estimate the maximum amount of revenues the Deltin casinos can generate from existing capacity we need to take into consideration the following facts about a casinos business model:

  1. More time people spend in a casino leads to more revenue for the casino. ( How much time a person spends in deltin casino). Based on our survery and estimates we will assume that a person spends 4 hours on average.
  2. How much money will a person spend on average/hourly in casino ?. For this, we assume RS 5000 every 4 hours which gives us 1250 Rs per Hour.

Based on the Above Points: 

The Current Revenue Generation Capacities of the 4 Casinos owned by Delta Corp can be ascertained as follows:

Gaming Positions (1565) * 24 hours * 330 days * Per hour Spends (1250) = 1549.35 Crores

Note * 330 days are the casino may be in operation as there maybe few days off due to maintenance.


Assumption 3: Per person spends 5000 Rs on average per visit to the casino

Assumption 4: Per person Spends 4 hours on average.


Assumption 5: Delta Corp Casino’s are operational for 330 Days in a year.




Currently, Delta Corp generates 377 Crores from its operations. If you compare this with the Total Capacity of 1549 Crores, you will realise that DELTA’s casinos utilise 24.33% of its existing capacity.

The Number of visitors per day would stand at 2289. (377 crores /5000- spends per person / 330 – working days in a year). 


Assumption 6: Capacity utilisation currently is at 24.33%, and 75.67% is spare capacity.





In our view future growth for Delta Corp can come four ways in future years namely:

1)New Casinos: We feel this revenue source for growth is quite unpredictable due to strict government policy and lack of clarity on the same. In 2018 onwards we feel that revenue will pick up as Daman casino with capacity of 1000 Gaming positions will become operational.


10 year ProjectionRs and Crores
YearRevenue Projection Daman CasinoGrowth Rate



2) Growth in Visitors (existing business): Growth in visitors and footfall will increase at 5-8% inline with growth in the tourism sector of India.


3) Growth in Spending by Visitors: We estimated that it would grow by 10% as salaries have tended to rise at    8-12% per year.


FutureVistors per daySpendingRevenue


Growth in VistorsGrowth in Spending
02289.696975000377.8 (current revenue)5%10%


4) Online Business: Very Recently Delta Corp announced that it had acquired online website Adda52 which is a poker and rummy online gambling site. This site currently has revenues of 60 crores with EBITDA of 30-35%. The online gambling industry in India is at a nascent stage. This is a strategic investment where Delta Corp can get its current audience online and get people to gamble when not inside their casinos. The growth rate of online business will be faster than its casino business and we estimate  it at 25%.

10 year ProjectionRs and Crores.Adda 52
YearRevenue Projection Daman CasinoGrowth Rate



The above statements give us a revenue projection (10 years) of 1565 Crores (GOA Business) + 931 Crores (DAMAN business) +558 (Adda52 Online Business).




Delta Corp has a decent financial track record. Delta Corp currently earns a close to 12% high return on equity.The company has a debt of 213 crores as of March 2016. Delta Corp is current reinvesting all its earnings, and there is no dividend income.This signifies that the company has been being in its growth stage.Delta Corp has high operating leverage with Fixed Costs at 48.72% of its Total Costs.





Delta Corp has experienced a health growth in revenues over the past five years. Except for 2015 when it experienced a drop of 46.30%. This is due to the sale of its real estate business in Africa. This is a purposeful strategy of focusing on and growth the gaming business. Since 2015 revenue growth is back on track.

% Growth25.95-46.3031.3116.57Base Year





Assumption 7: We expect the Revenue to grow at a CAGR of 23.48% till 2025 or till it reaches 3098 Crores considering existing capacities.




As of 2016 the PBIT (Profit Before Interest and Taxes) of DELTA Corp is 33.28%. As revenue increases in coming years with more capacity utilisation, the PBIT will increase to 50% as fixed cost reduces in proportion to sales.

We will, however, assume that the PBIT will peak at 50% which is the case with casinos worldwide.


Assumption 8 :  Profit Before Income and Taxes will increase to 50% in coming years as revenue rises due to operating leverage of DELTA CORP.




To maintain its current revenue and grow it in the future, the reinvestment in tangible assets is around 5% of its revenue each year. The company may make more acquisitions, Buy New ships, or build more casino resorts – This has not been factored in our valuation.




Almost always as is the case with predicting future earnings , there are many possible outcomes. Therefore a scenario analysis is important. After considering all factors our valuation reflects Average Per Share value of 278.86 Rs per share with a company valuation of 6,430 Crores INR.  A range of Rs 130.16 to Rs 697.66 Rs per share value was discovered as a result of conducting scenario analysis on our assumptions.






“The current market price of 182  Rs as against the valuation of 278.86 per share.Therefore we feel that DELTA CORP is undervalued by 34% which is a margin of safety as an investor. In conclusion , A long term investor can start buying at current levels of 182 Rs (as of 1st November 2016)  and keep adding if price goes down in the short run”.”
Please note that the valuation will be updated each quarter. As also will any news impacting any of the assumptions or factors in DELTA Corp’s valuation.So STAY TUNED.


Comments 52

  • What is the impact of demonetization on delta corp?

    • Hi Srinath. The impact will be a short term contraction in demand due to shortage in cash and notes. However the story for Delta Corp remains intact in the long term.


  • Brilliant analysis
    Had thot off all this quite a while back
    Im expectin a 500 rupee per share price by 2019

  • Hi, Can other competition will not catch up to Delta to take their market share. Is it too difficult to establish a Casino of this nature, if there large foreign players allowed to India?

    • Hi RamaRao,

      Great question, with government regulation and political issues it is tough for foreign or Indian players to get a new gambling license. If at all in the next ten years the government relaxes its policy to allow foreign players to enter then Delta Corp will be at an even greater advantage as it can attract strategic foreign investors or become an acquisition target. Most casino companies tend to acquire rather than start afresh without know how of local customs. As was the case in Macau on US companies.

      You can ask more questions in the forum as well as it helps me answer them faster. Here is the link

  • What would happen if Daman would be integrated into state of Maharashtra / Gujarat in future ?

    • Hi Shankar,

      Thanks for the question. Firstly it is tough to integrate a union territory into a state; it will require a change in the constitution.
      So the possibility of this happening is small.

      However, let us assume that Daman is integrated into the Maharashtra / Gujarat.

      The economy of Daman is dependent on tourism and tourists are attracted by alcohol and resorts.

      The locals will need the industry to be protected for their livelihoods.
      Delta Corp and many other hotel chains have made investments based on policies. So it will be illegal not take these investments in consideration and anti-democratic.

      Even if integration happens, it will be conditions attached which will protect the tourism industry!

  • What are the chances of delta corp not getting clearance for daman casino at all. Already more than three years have passed in anticipation.

    • Hi Prakash,

      I would say there is 75% probability of them getting the license. The reason for this is that they have acquired land and built a hotel on top of it. I would assume that if the company management was unsure, they would keep an asset light model as was the case in Sri Lanka and Sikkim. I dont have a crystal ball here but we can take a calculated call based on management commentary and track record. In the event the company does not get the license then there will be a downward revision from target price of 278 Rs. That is why i suggest you keep a margin of safety of 20-25% on the valuation of 278 Rs.

  • One of the very well researched document on delta. But the current status is 160 after qip– with no information on results or qip. Are u convinced this is mutlibagger

    • Hi Pawan,

      Great question,

      I have been keeping a close watch on the stock .

      The QIP is positive and valuation/target of 278 rs in the above report remains unchanged.

      I have answered this question about impact of QIP on Delta Corp in more detail in the discussion forum already.

      Feel free to ask any more question you might have. Thanks

      • Sir, thanks for your valuble feedback-,qip is 155– stock is already trading at that level. Not sure if its positive qip

        • Hi Pawan,

          I reserve the right to be wrong. But here is how i see the picture as per analysis. The Management has done a QIP at 155 at a 5% discount. But at the same time all the stock has been issued to a single institutional player which is a positive. Also the price of 155 i am ok with as they are utilising the funds for online business expansion and debt clearance. The discount is fine. Management ability to raise funds and confidence of institutional investor is a good sign

  • Thank you sir, excellent research on delta i hold my views on qip– as the trading price is already under the 155-. Best of luck and regards

  • Aditya sir , I want to know that why delta corp is not publisishing q4 result. What your prediction about revenue and profit front? Are they will touch q4 rrsult like q2 2016 like result? If qip is success then why stock is going down?.how much downside left to this stock.

    • Hi Ritwik,

      Great question.

      Ok, it is mandatory for a company to publish their quarterly results. There are many companies who haven’t published Q4 results. It is normal for companies to publish results in May end or June, its not something to worry about in my view.

      With respect to Q4 result , I don’t have a crystal ball , However based on my research above I feel that the long term wealth creation for delta corp is in place.

      The Q4 result will be muted as the Casino business and Goa Tourism will recover from demonetisation effect. If there are signs of growth coming back , it will be a positive in the short term.

      The short-term stock prices depends on supply and demand. It generally has very little to do with fundamentals. Fundamentals play out in the long run and affect a company’s stock price in the long-run (3-5 years).

      The QIP was at 155 INR , that is why the stock has gone down to those levels. As per my valuation one should accumulate and average slowly as the stock is undervalued and when growth returns in coming years it will move up.

      One thing you know, that QIP is done to raise money for two things : Pursue growth in the online business (ADDA52) and reduce debt , I feel its a positive for shareholder value in the long-term.

      Note: I reserve the right to be wrong and there are assumptions in the report above.

  • Thank you Aditya sir for your useful and valuable comments regarding delta corp . it somehow clear the wind and anxiety within my mind as I invested here at higher price. Thanks once again.

  • Sir, in what level delta should now average it out ? I have already. 2000 now share @169 /=. Now it is at 146.80 .result on 30.05.17 ,what to do? If result not be in expected lines then where it may go ? I am really worried.pls not disclosing anything that’s the matter of main concern.

  • Hi Aditya,
    I feel projections are a little too optimistic.. In quarter ending December 16, demonetisation affected company revenue so badly. .. These activities thrive on cash or unaccounted money which is going to shrink in comimg days..moreover.,too many regulations and interferences from government will make this company’s growth very unpredictable.. any adverse announcement will affect it very badly.. Also, Financial health of the company is not good.. No reserves and what would be the fate in such a situation?

    • Hi Preeti,

      That’s a great question.

      I understand that you are concerned as an investor and these risks can certainly affect the assumptions we are making in the report above. ,

      If you observe, the valuation of 278 in my research report is based on growth in revenue of 23.48% and PBIT of 50%.

      However, in the section on Valuation, I have also given a range of Rs 130.16 to Rs 697.66 Rs per share value which was discovered as a result of conducting scenario analysis on our assumptions.

      If you feel uncomfortable with a valuation of 278, discount it! and keep a margin of safety. At the current market price 141 INR, the margin of safety is close to 50%.

      However, here is the way I see the story panning out.

      I am going to answer your questions in 4 parts for clarity.
      1) The impact of Demonetisation,
      2) Growth Projections
      3) Risk posed by government regulations,
      4) Financial Condition of the company.

      1) The impact of Demonetisation.

      After announcement most investors did get scared about the impact, this may have on Delta Corp. This was evident as the share price crashed to levels of 100 Rs from 180 levels.

      However, there was a V-shaped recovery in the share price back to 160-180 levels after the company declared its Q3 results on Jan 17 because the impact was not as serious as anticipated by investors.

      Further to this, you will realize that the casino business is highly profitable worldwide especially in developed economies like China and USA.

      The case in India would be the same regardless of black money returning to the system; the market has already tested this hypothesis.

      What was so great about Q3 Results for this recovery to happen?

      If you compare the results Year on Year.

      The Q3 December 2016 results if you observe closely, the consolidated revenue is 103 crores compared to 100.14 crores in the previous year 2015 Dec. A growth of 3% in spite of 2 months of demonization. This shows stickiness in the consumer behavior.

      Net profit was 10 crores Dec 16 vs. 7.7 crores on Dec 15. With respect to Net profit, as I have mentioned above that the company is operating the casinos close to 24% capacity, it will grow faster with revenue growth because of operating leverage (higher fixed costs vs. variable costs).

      2) Growth Projections

      The valuation of 278 INR in my report is based on growth in revenue of 23.48% till 2025 (Assumption 7) and PBIT rising to 50% (Assumption 8).

      Revenue growth:

      For you to understand why I feel it will grow at this pace you need to take a look at the existing spare capacity which is at 75%. Further, I have calculated the capacity in revenue terms.

      Currently, utilization of capacity is 377 crores with the Total capacity of close to 1500 crores.

      If you observe the capacity calculations; you will notice that I have taken three parameters, 1) Time per person spends, 2) Number of visitors and 3) Amount of Money spent.

      First, if you see the report, I have taken a growth of money spent will increase between 8-12%. This is because of salary increment and inflation which leads to extra spending.

      Secondly, in the next 10 years, tourism in GOA is projected by world bank to growth at 8%. I have taken a 5% estimate; it can be a mix of growth in visitors and amount of time spent in the casino.

      This gives us a utilization of 1528 crores. However, the capacity regarding revenue in 2016 will rise to 4000 crores by 2025 because it’s calculated by how much people spend (growth 10%). So I have projected a capacity utilization of close to 38%.

      Current capaity utisation or revenue in 2025 = 1528.

      Similarly, I have calculated a growth of 25% for Daman casino from 2018 (yet to launch) till 2025. With a base of 100 crores (This is based on historical growth rates of GOA casinos, proximity to Mumbai and capacity).

      Daman Revenue in 2025 = 931 crores (refer table above).

      Thirdly the online business which is which DeltaCorp acquired recently has revenue of 60 crores. Due to the low base and scalability of online businesses, it can grow very fast, but I have done a growth rate of 25%. This is a growth driver!.

      ADDA 52 Revenue in 2025 =558 crores.

      This gives us a total revenue in 2025 = 631 + 931 + 1528 = 3098.
      To get revenue of 3098 the CAGR is 23.48%.

      PBIT (profit before interest and taxes).

      As I explained before the due to high operating leverage fixed costs will get distributed as revenue rises, and PBIT will grow from 33% to 50%. This is evident in previous quarters as well. Also, must be noted by you is the reason for 50% PBIT, it is because casinos in Macau and USA operate at these margins.

      3) The risk posed by government regulations.

      Here are the list of risks with my comments.

      1) Lack of Black Money will disrupt casino business – I feel this is a myth which was cleared in Q3 results.

      2) Regulations from Government – Here there are 2 possibilities

      1) The government will increase taxes on Casinos. – Taxes will be more if casinos are making more profits which are good for the shareholder so this is counter intuitive. Further nature of gambling is such casinos will be able to pass on the cost by increasing minimum bet size on tables.

      2) The government will cancel licenses.- This is a very remote possibility as Casino is GOA provides a lot of employment, in fact, it is second only to mining in the state of GOA.

      So on both front government will keep in mind tax collection, local economy, and employment.

      4) Financial Condition of the company.

      If you take a look at the consolidated Balance Sheet, the reserves are fine at 780 crores 2016. Cash position and current investments is at 22+92 = 104 crores. and the current ratio is close to 2.

      The only worry was the debt on books

      Further, the company has raised 750 crores via QIP at 155 rs per share, which further shows the confidence of institutional investors. This was done to clear debt and grow the online business.

      Before I sign off, I don’t have a crystal ball so the story can play out differently, we will find out in due course of time.

      P.S If I have missed something then please reply back.

  • superb clarity of thoughts. looks good risk mitigation of investment in Delta Corp.

  • Aditya, Very nicely written, keen points made! One question though – why did you not use something like 8 hours per day for 330 days or 12 hours per day for 330 days? You have used 24 hours in your capacity which in turn impacted the revenue expected.

    In your survey, that you said have done as per the article, you found the business operates 24 hours with same foot fall? Or only 8-10 hours in a day are prime hours and hence 1250 per year has to be calculated on an average only for a maximum of say 12 hours per day?

    hence this will put Gaming Positions (1565) * 12 hours * 330 days * Per hour Spends (1250) = 774 crores.

    Awaiting your reply.

    • Hi Srujan,

      Again a brilliant question.

      I visited the casinos for two weeks for on-ground research both peak and off-peak hours. And I did a head count during late night hours and peak hours. I tried to weed out the bias using statistics.

      A few points for you to think about

      1) You are right footfall is not the same during all hours. However, the casino is open 24 hours so we cannot take 12 hours in any scenario.

      2) The casino charges 3000-3500 (with one-time play coupons) during peak hours and 1250-1500 during non-peak.

      3) Per person spends about 4 hours on average (5000 Rs spent). I know this because High rollers (big gamblers) get free entry but with a compulsion to play for 8 hours. I also spoke to the staff on this.

      4) Further to this, there are poker tournaments and shows which management tries to push into nonpeak hours.

      5) Capacity is at 25% during nonpeak and 40% during weekends and peak hours.

      6) So either way, if you take an average of 1250 rs for 24 hours or 3500 (charged during peak hours for entry), you arrive at close to 1500 crores of capacity.

      Here ae my calculations on capacity.

      Let me know if you have more questions.

      .CroresOff Peak HoursPeak HoursWeekends
      Goa Current Gaming Positions156525%40%40%
      Average person spends per hour125018624
      Days in operation33023423496
      Total Goa Capacity Gaming Demand317025013162507020001152000
      Total Estimated Revenue from 4 hours per person Yearly1585.1255625300012000
      Per day capacity96076340.5
  • Sir– how sure are you that daman license will be granted

  • market had a positive impact after Q4 results. 5% up today

  • Aditya sir, what is is daman license position. Why it is prolonged delay? From last one year management speaking about growth and hoping licence will clear soon. But still now no news . they should give clear direction whether they sit and watch only when govt will approved or take vigorus initiation about this. Lot of small investor are hopefull about delta but management are very much silient and less active that also seen in qip recently. For a permission 2 year very very long. Do you personally think its going to happen in 2017. Because market is on very high and the stock is very much less active . we are very anxious that if market crash then where it will go.kindly put about your valuable comment.

    • We need to wait and watch. The first license in any new state takes time. Also you should look at government as a stake holder as it earns more tax revenue from casino business like the case is in Goa. I am expecting it by 2018.

  • Aditya ur views are recommended over here
    Got to know that there is possibility of merger of Daman diu wid Gujarat as indicated by pm on his last visit dats d reason stock crashed from 210 to 160
    If it so happen den delta wud b vanished as gambling is ban iN Gujarat
    Your take please on this

    • Hi Chetan,

      Thanks for the question. Firstly it is tough to integrate a union territory into a state; it will require a change in the constitution.
      So the possibility of this happening is small.

      However, let us assume that Daman is integrated into the Maharashtra / Gujarat.

      The economy of Daman is dependent on tourism and tourists are attracted by alcohol and resorts.

      The locals will need the industry to be protected for their livelihoods.
      Delta Corp and many other hotel chains have made investments based on policies. So it will be illegal not take these investments in consideration and anti-democratic.

      Even if integration happens, it will be conditions attached which will protect the tourism industry!

  • Dear aditya, Is there any update about delta that a sudden fall seen on yesterday ? May I average it in what price???

  • Do you think the “smart” owners of this company will at any time allow shareholders to make profits? Does your research suggest that the price movement in this stock in last 2 year period was manipulated?

  • Impact of GST is not clear

  • Sir – what is ur estimates on results on 24 th??

  • Deltacorp conducts investors conference on quarterly results(conducted on 17/10/17 on 2nd quarter results) but never publishes transcripts of concall for benefit of small investors. This concall benefit institutional ,HNI etc who attend concall. Many listed companies post such transcripts on stock exchange website or on their own website. I request you to take up this issue with Delta Corp Management to publish such transcripts for benefit of small investors. Transcript contains valuale informations. Thnk you

  • What is d next target of Delta Corp? Is any correction possible in near term? If it happens what would be the levels?

  • sir one should still hold DC or should sell half quantity

  • Sir, I was planning to buy DC shares and came across your blog during the research. I could see that DC corp has reached the target price in an year now. Is it wise to start buying now or wait to see any corrections in price in near future?

  • One of the best analysis done on Delta Corp, I personally feel its Online Gaming business will be an equal if not a larger revenue generator in the long run.

  • Is it possible to invest or take partnership in Goa casinos?

  • What are your views about Delta corp at current 320 levels ? Thanks

  • sir one should still hold DC??if yes then what could be the target price

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