Delta Corp Shares Fell Over 2% Revenue Dropped Over 7% YoY in Q3FY25

On January 14, 2025, Delta Corp shares slipped over 2% and touched the day low of ₹106.00 at 09:20 AM after opening at ₹110.20 after the company released its results for the quarter and nine months ended December 31, 2024.

Delta Corp Q3FY25 Earnings Overview

The online gaming company reported a YoY growth of 3.7% in net profit, reaching ₹35.7 crore for the third quarter ending December 31, 2024. In the same quarter of the previous year, the company had posted a net profit of ₹34.5 crore, according to a regulatory filing. However, revenue from operations fell by 7.5%, totalling ₹194.3 crore compared to ₹210.1 crore in the previous year.

At the operating level, EBITDA decreased by 42.4% to ₹32.2 crore in Q3 FY25, down from ₹55.8 crore in Q3 FY24. The EBITDA margin also shrank to 16.6% in the reporting quarter, compared to 26.6% in the same period last year. EBITDA stands for earnings before interest, tax, depreciation, and amortisation.

Delta Corp Demerger

The company’s board in September 2024 approved the demerger of its Hospitality and Real Estate Business through a Composite Scheme of Arrangement. As per the scheme, the Hospitality and Real Estate Business, including the project proposed to be developed in Dhargalim, Goa (Dhargal Project) was to be demerged into Delta Penland Private Limited (DPPL).

Objective of Demerger

• Enhanced Focus and Management Accountability: The simplified corporate structure will enable the management to concentrate on the Company’s core business—gaming—thereby improving operational efficiency and accountability. The resulting company will focus exclusively on the hospitality and real estate sectors.
• Unlocking Value: Currently, the Company’s hospitality and real estate assets are undervalued due to its primary association with the gaming industry. This Scheme will unlock greater value for shareholders by issuing one equity share of the resulting company, which will be listed post-scheme, for each share held in the Company.
• Investor Opportunity: Upon implementation of the Scheme, two distinct, publicly listed entities will emerge: the resulting company, focusing on hospitality and real estate, and the original company, continuing in the gaming sector. This structure provides investors with the flexibility to hold shares in one or both companies, aligning their investment strategy with their preferences.
• Sector-Specific Growth and Investment Potential: The two entities will be better positioned to pursue targeted growth strategies within their respective sectors, attracting specialized investors. This separation will also help mitigate risks by diversifying across different industries.

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