Synopsis:
Delta Corp came under pressure after the government proposed a 40 percent GST levy on casinos under the GST 2.0 framework, up from 28 percent earlier. Coupled with ongoing GST litigation worth Rs. 23,200 crore and weaker Q1 earnings, the tax hike poses near-term challenges to profitability and growth.
A casino stock came under focus after the government proposed a revision in the Goods and Services Tax (GST) framework. The move, part of the broader GST 2.0 reform, brings higher levies on “sin goods,” which could reshape the operating dynamics for the gaming and entertainment industry.
Delta Corp, India’s leading casino operator, currently holds a market capitalization of Rs. 2,273.11 crore. The stock opened at Rs. 86.47 against its previous close of Rs. 87.95 and slipped to an intraday low of Rs. 84.29, marking a decline of 4.16 percent from the previous close. Over the past year, the stock has delivered a negative return of 37.34 percent.
What’s the news?
The government has proposed a 40 percent GST rate on casinos and other sin goods under the new GST 2.0 regime. The broader reform aims to simplify the existing tax structure by consolidating multiple slabs into two, 5 percent for essentials and 18 percent for most goods. For sectors such as tobacco, alcohol, online gaming, and casinos, the government has retained a higher slab of up to 40 percent, citing their fiscal and social significance.
For casino operators, this marks a shift from the earlier 28 percent GST to the full 40 percent rate. The move is expected to influence cost structures and demand trends, as companies balance absorbing part of the higher levy with potentially passing it on to customers.
Government Rationale
The rationale behind the reform is centered on rationalizing the indirect tax framework while ensuring that goods and services with higher social costs attract proportionately higher taxes. By consolidating slabs and streamlining compliance, the government also aims to enhance efficiency and boost revenue collections without expanding the overall tax net.
Ongoing GST Litigation
Delta Corp has also been engaged in long-standing GST-related litigation. Between July 2017 and November 2022, the company and its subsidiaries received show cause notices alleging tax shortfalls of around Rs. 23,200 crore across two filings (Rs. 16,823 crore + Rs. 6,384 crore). Several of these matters are sub judice, with courts including the Bombay High Court and the Sikkim High Court granting stays on certain demands.
Outlook for Delta Corp
While the higher GST rate presents near-term headwinds for the sector, industry participants, including Delta Corp, are expected to adapt by recalibrating strategies, enhancing efficiency, and exploring ways to mitigate the impact on profitability. The long-term growth prospects of the gaming and entertainment industry will likely hinge on regulatory clarity, evolving consumer demand, and the company’s ability to balance compliance with sustainable operations.
Financial Snapshot
On a sequential basis, sales rose marginally by 0.5 percent, moving from Rs. 183 crore in the previous quarter to Rs. 184 crore in Q1FY26. Operating profit, however, declined by 4.9 percent, falling from Rs. 41 crore to Rs. 39 crore. Profit before tax witnessed a steep drop of 84.0 percent, sliding from Rs. 237 crore to Rs. 38 crore. Net profit also contracted sharply by 82.4 percent, reducing from Rs. 165 crore to Rs. 29 crore on a quarter-on-quarter basis. Q4FY25 included other income of Rs. 211 Crore.
On a year-on-year comparison, sales registered a 3.4 percent growth, increasing from Rs. 178 crore in Q1FY25 to Rs. 184 crore in Q1FY26. Operating profit dropped by 17.0 percent, moving down from Rs. 47 crore to Rs. 39 crore. Profit before tax recorded an 8.6 percent growth, rising from Rs. 35 crore to Rs. 38 crore, while net profit improved significantly by 31.8 percent, climbing from Rs. 22 crore to Rs. 29 crore.
About the company
Delta Corp Limited is a diversified holding company in India with interests across live, electronic, and online gaming. Its business spans three key divisions—Casino Gaming, Online Skill Gaming, and Hospitality. Through its subsidiaries, the company operates casinos in Goa, Sikkim, and an international property in Nepal, together offering nearly 2,000 gaming positions.
In the online segment, it operates Adda52.com via Deltatech Gaming Limited, one of India’s leading poker platforms. Its portfolio includes offshore casinos such as Deltin Royale and Deltin JAQK, the floating hotel casino Deltin Caravela, and Casino Deltin Denzong in Gangtok. Beyond gaming, the company also owns hospitality assets, including hotels in Goa and Daman.
Written by – Manan Gangwar
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