Late Rakesh Jhunjhunwala Portfolio Stock: Is set for Demerger
Delta Corp Announces Demerger of Hospitality and Real Estate Business
Delta Corp Limited, a prominent player in India's gaming and hospitality sectors, has announced the demerger of its Hospitality and Real Estate business into a newly formed company, Delta Penland Private Limited (DPPL). This strategic move is aimed at enhancing operational efficiency, unlocking shareholder value, and providing targeted investment opportunities across distinct business verticals.
Demerger Details
The decision, approved by Delta Corp Board of Directors on September 24, 2024, will see DPPL, currently a wholly-owned subsidiary of Delta Corp, taking over the company’s Hospitality and Real Estate assets. These assets include the Deltin Suites, a 106-room casino-hotel in Goa, and The Deltin, a 176-room five-star resort in Daman. The proposed Marvel Resorts, a 440-room property under construction in Goa, and land for a future integrated resort in Dhargalim, Goa, will also be transferred to DPPL.
DPPL will soon convert to a public company, and its shares will be listed on the stock exchanges. Upon the scheme's completion, existing Delta Corp shareholders will receive 1 share of DPPL for every 1 share they hold in Delta Corp. The demerger is expected to take 10-12 months, subject to approvals from shareholders, SEBI, and other regulatory bodies.
Rationale for the Demerger
The primary goal behind this demerger is to create distinct entities focusing on different core businesses. Delta Corp will concentrate on its gaming business, which includes live, electronic, and online gaming, while DPPL will focus exclusively on Hospitality and Real Estate. This clear demarcation is expected to enhance management accountability and operational efficiency.
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Q1FY25 Results:
Delta Corp revenue from operations dropped 30.3% year-on-year to Rs.180.7 crore in Q1FY25, down from Rs.259.3 crore in Q1FY24, with gaming operations, its primary revenue source, declining 33% to Rs.169.42 crore. The company's hospitality segment also struggled, contributing to the revenue decline. EBITDA plunged 68.2% to Rs.30.5 crore, with the EBITDA margin shrinking to 16.9% from 36.9%, indicating significant pressure on operating profitability.