Delta Corp Shares Slump as GST on Online Gaming and Casinos Soars

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How Delta Corp Shares Fell 28% on GST Hike for Online Gaming and Casinos

Delta Corp Ltd, the leading gaming and entertainment company in India, faced a massive blow on Wednesday as its shares plunged 28% to hit a 52-week low of Rs 175.65 on BSE. The reason behind this steep fall was the GST Council’s decision to increase the GST rate on online gaming, horse racing, and casinos from 18% to 28%. This move will have a significant impact on the profitability and growth prospects of Delta Corp, which operates online gaming platforms like Adda52 and PokerHigh, as well as three offshore casinos and one land-based casino in Goa.

Why GST Hike is Bad News for Delta Corp

The GST hike on online gaming and casinos will affect Delta Corp in multiple ways. First, it will increase the tax burden on the company, which will reduce its net profit margin. According to analysts, the GST hike will reduce Delta Corp’s earnings per share (EPS) by 10-12% for FY24.

Second, it will make online gaming and casinos more expensive for customers, which will reduce the demand and user base for these services. Online gaming and casinos are already considered luxury or discretionary spending by many customers, and a higher GST rate will further discourage them from indulging in these activities. This will affect the revenue growth of Delta Corp, which derives more than 60% of its revenue from online gaming and casinos.

Third, it will create an uneven playing field for Delta Corp, which will face stiff competition from unregulated or illegal operators who do not pay any taxes. These operators will be able to offer lower prices and higher payouts to customers, which will lure them away from Delta Corp’s platforms. This will erode the market share and brand value of Delta Corp, which has invested heavily in building a loyal customer base and a strong regulatory compliance framework.

How Delta Corp Can Recover from GST Shock

Delta Corp is not the only company that is affected by the GST hike on online gaming and casinos. The entire industry is facing a huge challenge to survive and grow in this new tax regime. However, Delta Corp has some advantages that can help it overcome this setback and bounce back stronger.

First, Delta Corp has a diversified portfolio of businesses that can cushion the impact of the GST hike on online gaming and casinos. The company also operates in segments like real estate, hospitality, and live entertainment, which have lower or no GST rates. These segments can provide stable and alternative sources of income for the company, especially when the online gaming and casino segment is under pressure.

Second, Delta Corp has a strong brand equity and customer loyalty that can help it retain its existing customers and attract new ones. The company has established itself as a leader in the gaming and entertainment industry, with a reputation for offering high-quality services, innovative products, and fair gameplay. The company also has a loyal customer base of over 1.5 million registered users across its online gaming platforms, who have high engagement and retention rates. The company can leverage its brand strength and customer loyalty to offer value-added services, loyalty programs, discounts, and promotions to mitigate the impact of the GST hike on customers.

Third, Delta Corp has a robust growth strategy that can help it expand its market presence and reach new customers. The company has plans to launch new online gaming products and platforms, such as fantasy sports, rummy, esports, etc., which have high growth potential and customer demand. The company also has plans to enter new geographies, such as Sikkim and Nepal, where it can operate casinos with lower or no taxes. The company can also explore opportunities in international markets, such as Africa and Southeast Asia, where online gaming and casinos are gaining popularity.

Conclusion

Delta Corp shares fell 28% on Tuesday after the GST Council decided to levy a 28% GST on online gaming, horse racing, and casinos. This decision will hurt the profitability and growth prospects of Delta Corp, which operates online gaming platforms like Adda52 and PokerHigh, as well as three offshore casinos and one land-based casino in Goa. However, Delta Corp has some advantages that can help it recover from this shock and emerge stronger. The company has a diversified portfolio of businesses, strong brand equity, and customer loyalty, and a robust growth strategy that can help it overcome the challenges posed by the GST hike on online gaming and casinos.

Keywords: Delta Corp, GST hike, Online gaming and casinos, Gaming, Entertainment industry, Adda52, PokerHigh, News

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