[T.S.R:14557] Investment Idea - DELTA CORP

 

DELTA CORP

CMP 34/-

 

·      Company promoted by Mr Jaydev Mody, former MD of Peninsula Land and still offers consultancy in real estate to peninsula. Company is mainly in to Casino Gaming business & Real Estate. It is biggest Casino player in India, located in Goa; where it operates two offshore casinos – Casino Royale & King's Casino. Casino Royale is biggest casino of country, operated on board [on MV Royale Flotel].

·         On Real Estate Side Company owns a property in Prabhadevi, Mumbai, capable of generating rentals of around Rs 25 crs per annum. But growth driver will be its JV with a subsidiary of Reliance Ind in Nairobi [Kenya], which acquired appx. 8 Lac sq. feet land for development of commercial property. JV has already developed a commercial property Delta House which is leased out.

·         The near term growth driver will be Casino Gaming business, where the company has plans to run existing two casinos for longer hours on daily basis. They are also looking to commission third land based casino, license for which was acquired from Advani group of Goa [Advani Hotels]. This casino license is under the name of Advani Pleasure & tours and is the only Casino License in India, with FIPB approval to attract FDI up to 49% [now FDI in Gaming is banned] and thus can attract foreign gaming companies to get stake in this business through this company.

·         Company is also intending to sell the Prabhadevi property to raise appx Rs 200 crs, which can help them in finalizing plans to acquire hotel in Goa [preferably Advani Hotels] and develop 42 delux rooms on board ship Ryale Flotel, to accommodate guests of Casino Royale.

·         Company plans to remain biggest player in Casino Gaming business in India and is thus continuously looking for opportunities in this business. It is also moving in to the business of management of third party casinos, which will also generate good revenues and gives control over larger number of casinos in India.

·         FDI in casino business may be brought in at hefty valuations, as no other casino gaming company from India can offer the investment opportunity to overseas player willing to enter India's fast growing casino/Gambling market. Similarly there are strategic/PE investors, looking for a stake in India's fast growing Casino Gaming business, may also be willing to offer attractive valuations to company. [By nature many Indians are speculators/Gamblers; offering huge business opportunity]

·         The Nairobi property development work will be reflected in consolidated accounts [in significant way] only from FY 12 onwards, so no immediate trigger may come from this overseas real estate venture.

·         So immediate triggers for the stock could be – 1. Sale of Prabhadevi property. 2. Acquisition of Advani Hotels. 3. FDI/ Strategic investor induction in Casino business. If any of these event happens soon, it can trigger a strong rally in stock with target of Rs 45-50 in medium term. BUY.     

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