Indian Casino Operator Delta Corp is still trading near its 52-week lows. The company is facing tough times as the government has increased taxes on casinos and gambling. Delta Corp was among high performance stocks but since the introduction of high taxes, the stock has witnessed selling pressure. The company reported positive results but stock was trading flat today. Delta Corp, India’s leading listed casino and online gaming company, reported a 3.6% increase in consolidated net profit to Rs 35.73 crore for Q3 FY25, despite a 7.5% decline in revenue from operations to Rs 194.33 crore compared to Q3 FY24. While the online skill gaming division showcased robust growth, challenges in the casino gaming segment and increased operational costs weighed on overall performance. The company’s profitability metrics also reflect higher total expenses and reduced operating income. Below, we break down Delta Corp’s financial performance, key segment highlights, and strategic implications for stakeholders.

Key Financial Highlights

Net profit increases despite revenue decline:

Consolidated net profit rose by 3.6% YoY to Rs 35.73 crore, showcasing the company’s ability to maintain profitability amid revenue challenges.
Revenue from operations declined by 7.5% YoY to Rs 194.33 crore, highlighting potential market or operational pressures.
Profit before tax (PBT) takes a hit:

PBT decreased by 40.8% to Rs 29.42 crore, compared to Rs 49.68 crore in Q3 FY24, reflecting reduced efficiency in managing costs relative to revenue.
Total expenses on the rise:

Expenses grew 2.49% YoY to Rs 177.64 crore, driven by higher costs of material consumption, which increased by 13.26% to Rs 18.06 crore.
License and registration fees slightly declined by 3.35% to Rs 30.34 crore, offering some cost relief.

Segmental Performance

Casino gaming division faces challenges:

Revenue from the casino gaming division dropped 3.36% YoY to Rs 175.44 crore, highlighting potential market headwinds or subdued consumer spending in this segment.
Online skill gaming division shows robust growth:

Revenue from the online skill gaming segment surged by 16.15% YoY to Rs 45.45 crore, driven by increased user engagement and growth in digital platforms.

Operational Efficiency and Cost Dynamics

Rising operational costs impact profitability:

Selling, general, and administrative (SG&A) expenses rose 3.14% quarter-over-quarter (QoQ) and 0.87% year-over-year (YoY), indicating escalating overheads.
Decline in operating income:

Operating income fell 9.38% QoQ and a sharper 54.34% YoY, reflecting potential inefficiencies or challenges in converting revenue into profit.

Strategic Overview

Diversified business model:

Delta Corp operates across casino gaming (live, electronic, and online), hospitality, and real estate, providing a diversified revenue base.
The company’s online gaming division’s strong growth indicates an opportunity to expand further into digital platforms, which are less capital-intensive compared to physical casinos.
Cost control and efficiency improvements:

While the rise in expenses is concerning, strategic cost management and operational efficiency could help Delta Corp improve its margins in future quarters.

Actionable Insights for Investors

Focus on digital growth: The 16.15% YoY growth in the online skill gaming division highlights the potential of this segment to drive future profitability, particularly as more consumers migrate to digital platforms.
Monitor cost management: Rising SG&A expenses and declining operating income underscore the need for better cost controls. Investors should watch for updates on how Delta Corp plans to address these inefficiencies.
Casino recovery potential: While casino gaming revenue saw a decline, a recovery in consumer spending or targeted marketing could help rejuvenate this core segment.