Delta Corp Ltd, India’s leading gaming and hospitality company, reported a sharp decline in quarterly profit for the second quarter of FY2024, weighed down by regulatory headwinds and a major write-down in its online gaming investments.
Profit Falls on Lower Revenue and Investment Losses
The company’s net profit dropped to ₹24.1 crore, compared to ₹43.87 crore in the same quarter last year, marking a 45% year-on-year decline.
Revenue from gaming operations fell 9.8% to ₹122.74 crore, while hospitality income dipped 14.5% to ₹8.31 crore.
Delta Corp also recorded a ₹378.34 crore reduction in the fair value of its online gaming investments following the implementation of stricter online gaming regulations.
Impact of New Online Gaming Regulations
The losses primarily stemmed from the Promotion and Regulation of Online Gaming Act, which prohibits games involving real-money stakes.
This led Delta Corp to write down its holdings in Deltatech Gaming, Head Digital Works, and Openplay Technologies to nil, reflecting the heavy regulatory blow to the online gaming industry.
Regulatory Pressure Mounts with GST Notices
Adding to its challenges, Delta Corp is facing GST show-cause notices amounting to ₹28,207.30 crore for alleged tax shortfalls between July 2017 and November 2022.
The company has contested the demands, calling them arbitrary, and is pursuing legal remedies to challenge the claims.
Earnings and Valuation Metrics
Basic earnings per share (EPS) for the quarter stood at ₹0.84, down significantly due to reduced profitability and investment write-downs.
Outlook: Navigating Regulatory and Market Challenges
Delta Corp continues to operate in a highly regulated and evolving gaming landscape. The company’s near-term performance will depend on its ability to adapt to new gaming laws, strengthen its core casino and hospitality businesses, and manage its regulatory liabilities.
Analysts expect the company to focus on stabilizing operations and exploring alternative growth avenues, as future quarters will determine whether it can return to a sustainable growth trajectory amid mounting legal and financial pressures.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.