Shares of Delta Corp, which operates three offshore casinos in Goa, were locked down in the lower circuit on Wednesday after falling by the maximum permissible 20%, as investors turned jittery on the future of the gaming business in the country after the government’s crack down on black money.
Dealers said the fact that there were no buyers for the company’s shares despite the Sensex recovering almost 1,500 points from the day’s low means Wednesday’s fall shouldn’t be seen as a one-off. “There was some institutional buying in Delta Corp shares around 9.40 am. But post that, they again hit the lower circuit with absolutely no buying interest even though the Sensex pulled back sharply from the lows,” said a dealer at a large domestic brokerage.
The research head of the same brokerage said that most high spenders in casinos in India operate in cash, which is mostly is unaccounted for, and the government demonetising high-denomination notes will seriously hamper the company’s business in the short to medium term. “I don’t expect the high rollers to walk into the casinos and swipe their credit/debit cards for lakhs of rupees, at least not any time soon,” he added.
Delta corp, in which ace investor Rakesh Jhunjhunwala, along with his wife, has a 9.74% stake, had made a consolidated profit of R42.6 crore on revenues of R377.9 crore in FY16, with the casino business accounting for 86.8% of the revenue and being the only EBIT positive segment. However, its shares have often had a topsy turvy ride given the nature of the business. In
FY15, for instance, Delta Corp shares corrected over 15% in just four days after the income tax department raided its, along with several other, casinos in Goa.