Rakesh Jhunjhunwala’s gamble on this stock is proving to be a bust after it slips 20% in a month
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Some of the Big Bull Rakesh Jhunjhunwala-owned stocks have seen a major correction over the past few months. The latest to join the list is Delta Corporation, a Mumbai-based casino and recreation company.
Rakesh Jhunjhunwala owned over 10% of Delta Corp back in 2016. Since then, he has been consistently paring down his holding. According to the latest regulatory filings as reported by ET Now, his stake is now down to 6.17%.
The news caused a 7% decline in
Delta Corp share price, taking its losses in the last one month to over 20%.
Delta Corp has been facing the brunt of the Covid-19 pandemic as lockdowns and travel restrictions forced it to shut down its casinos for several months in 2020 and 2021.
In fact, the fall in Delta Corp has been so bad that the company lost two-thirds of its value between the first Covid-19 cases being reported in China to when India entered a nationwide lockdown in March 2020.
Since then, the company’s shares surged over five times, crossing the ₹300 mark in early April. But the tide turned after its fourth quarterly performance was announced.
A 17% decline in its net profit to ₹48 crore and a marginal growth in revenues — wiped out more than a third of its market capitalisation in two months.
Delta Corp fails to recover even after India returns to normalcy
Delta Corp’s struggles paint a sordid picture of its future. The casino operator painted a grim outlook as its casino gaming division reported a 16% decline in sales, while the hospitality division sales were down by 25%.
In contrast, the company’s online skill gaming division reported a 19% surge in revenue as compared to the December quarter.
The company’s board said that they are optimistic about the company’s performance in the year ahead.
28% GST on casino gaming could play spoilsport
Earlier in May, reports suggested that the government’s Group of Ministers (GoM) has agreed to levy 28% GST on casinos, race courses and online gaming. This decision impacts two out of three divisions of Delta Corp, namely, casino and online gaming.
Currently, only online games involving betting attract 28% GST – regular online games without betting and gambling attract only 18% GST.
That said, the new rate of GST is yet to be tabled and approved by the GST Council. If it passes through, any possible growth in revenues will take a huge margin hit – even before it reaches the till box.
