Emkay Research has reiterated its Buy call on Delta Corp with a target price at Rs 380 per share, implying potential upside of 68 percent after the company's profit was ahead of expectations.
Gaming company Delta Corp jumped 8 percent intraday Tuesday as research house Emkay expects the stock to return 68 percent over one year after strong earnings for September quarter.
Emkay Research has reiterated its Buy call on the stock with a target price at Rs 380 per share, implying potential upside of 68 percent after the company's profit was ahead of expectations.
"We were positively surprised by highest ever Goa Casino revenue of Rs 200 crore. This shows that DELTA is gaining market share from small land based casinos post disruption caused by license fees hike," the brokerage firm said.
The management expects momentum to continue in Goa backed by rising footfalls and improving gross gaming revenue.
"The performance of online gaming business suffered due to high marketing spends. However this was offset by strong performance of Goa casinos," Emkay said.
It raised FY19/20 EPS forecast by 17/6 percent to factor in better performance of Goa casinos.
The country's largest gaming company said profit in Q2FY19 grew by 11 percent year-on-year to Rs 47.7 crore and revenue surged 39 percent to Rs 201 crore.
On the operational front, EBITDA (earnings before interest, tax, depreciation and amortisation) increased 16.4 percent to Rs 76 crore in September quarter and margin expanded to 48 percent from 43 percent in year-ago.
Emkay feels Delta's earnings would expand at healthy 40 percent in FY20E due to revenue CAGR of 24 percent FY18-20E and margin recovery. "The FY19 earnings would increase 16 pecent due to significant increase in casino license fees in Goa."
It said the positive catalyst for the stock would be the announcement of new gaming policy by Goa government. "Indian Gaming industry would expand multifold."
At 13:42 hours IST, the stock price was quoting at Rs 239.50, up Rs 13.05, or 5.76 percent on the BSE.
