Delta Corp shares plunge 5% after weak Q3 FY24 earnings

Shares of Delta Corp, an online gaming firm, plunged 5% to ₹143.10 apiece in early deals on Wednesday after the company delivered a weak set of numbers for the December-ending quarter (Q3 FY24).

The company on Tuesday reported a consolidated net profit of ₹34.48 crore in Q3 FY24, marking a substantial decline of 59.34% compared to the net profit of ₹84.82 crore in the corresponding period of the previous year.

The revenue from operations for the quarter also came in lower at ₹234.41 crore in Q3FY24, marking a 15.58% decrease from ₹277.68 crore in the corresponding quarter of the previous fiscal year. The company posted an EBITDA of ₹55.5 crore, which is a 45% decline compared to ₹102 crore posted in Q3 FY23. EBITDA margins came in at 23.9%, experiencing a1,350 basis point fall compared to 37.4% in the October-December period of the previous fiscal year.

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Breaking down the segments, income from gaming operations witnessed an 18% fall to ₹181 crore in the third quarter of FY24, as against ₹222 crore in the corresponding period of the previous year.

Online skill gaming operations revenue also saw a 9% year-on-year decline, reaching ₹39.13 crore in the reported period. On a positive note, revenue from the hospitality business showed a marginal uptick, reaching ₹13.74 crore.

In addition to its Q3 FY24 numbers, the company said that on September 27, 2023, the holding company and its two subsidiary companies received show-cause notices from the Directorate General of GST Intelligence (DGGI), Hyderabad. These notices allege a short payment of Goods and Services Tax (GST) totaling ₹16,822.9 crore for the period from July 1, 2017, to March 31, 2022.

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On October 28, 2023, another subsidiary of the company received a GST show-cause notice amounting to ₹6,384.32 crore for the period from July 1, 2017, to November 30, 2022, from DGGI, Kolkata, as reported by the company.

The company highlighted that the authorities' demands, based on the gross bet value/gross face value as against gross gaming revenue/gross rake amount, have been a prevalent industry concern. In response to this, industry participants, including the company, have made multiple representations to the government on this matter.

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To address these concerns, both the company and its subsidiary companies have taken legal action by filing Writ petitions and have obtained stay orders from respective high courts, as per the company's exchange filing.

At 9:45 AM, the stock was trading with a gain of 2.7% at ₹147.50 apiece. 

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