Delta Corp shares tumbled 44% in three months; time to buy, sell or hold?

Shares of Delta Corp Ltd have crashed 44% in the last three months, leaving investors in the gaming and casino firm jittery about the prospects of the stock. Of the 44% fall, a 19% decline was logged in the last week after the firm received tax notices totaling Rs 16,822 crore from the Directorate General of GST Intelligence. The demand was for the period between July 2017 and March 2022.  

This was the second major crash for the stock in nearly three months. The stock closed 23% lower at Rs 189.35 on July 12 after the GST Council imposed a levy of 28% GST on online gaming, horse racing, and casinos.  

The stock will also be in focus tomorrow as 28% GST on online gaming came into effect from October 1. Earlier, online gaming platforms paid 18% GST on the platform fees. 

Delta Corp shares ended 1.35% higher at Rs 142.70 on Friday against the previous close of Rs 140.80 on BSE. However, they hit a fresh 52-week low of Rs 133.10 in the previous session. Market cap of Delta Corp rose to Rs 3821.09 crore on BSE. Total 19.46 lakh shares of the firm changed hands amounting to a turnover of Rs 27.01 crore in the previous session.  

The gaming and casino stock has lost 26.37% in one year and fallen 33.74% since the beginning of this year. Delta Corp stock has a one-year beta of 1.4, indicating very high volatility during the period.   

In terms of technicals, the relative strength index (RSI) of Delta Corp stands at 18, signaling it's trading neither in the oversold nor in the overbought zone. Delta Corp shares are trading lower than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages.    

One notice for Rs 11,140 crore was issued against Delta Corp. The other notice for Rs 5,682 crore has been raised against three of its subsidiaries -- Casino Deltin Denzong, Highstreet Cruises and Delta Pleasure Cruises, the company said in a regulatory filing.   

In response to the GST demand, Delta Corp said the GST notice was based on the gross bet value and not gross gaming value. It said it would pursue legal remedies to challenge this order. The company pointed out that such tax demands were not a company-specific problem, but an industry-wide phenomenon.     

"The Company and its subsidiaries have been legally advised that all the above notices and the tax demands are arbitrary and contrary to law, and the Company and its subsidiaries will pursue all legal remedies available to them to challenge such tax demands and related proceedings," the company said.

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Here’s a look at what analysts said on the outlook of the stock.  

Sujit Deodhar, Head Technical Analyst at Wellworth Share & Stock Broking said, “Delta Corp as seen on its monthly chart has witnessed a breakdown from its support zone of Rs 173-162 levels with huge volumes. The stock on its daily chart has seen two major cracks with high volumes, forming a downward flag pattern. A retracement drawn from the highs of Rs 141.90 in the month of November 2010 to the lows of Rs 39.05 in March 2013, unfolds the demand & supply zone for this stock. It can be observed that the stock had a strong rally post March 2020, from the lows of Rs 53 to the levels of Rs 339 and a steep fall was followed.” 

"Traders should have an approach of sell on rise for this stock, as the downward trend is in place for a shorter & longer time frame too. For investors, this should be a wait and watch period till the stock approaches the demand zone of Rs 116-78 levels, where it should ideally stabilise and consolidate for some time, to make itself an attractive buy," Deodhar added. 

Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers said, “On a monthly scale, Delta Corp is looking weak. At the current juncture, the said counter is near support of Rs 140 and if this level is taken out, then we may see Rs 120 in the short term. On flip-side resistance is seen near Rs 160, followed by Rs 180.”  

Abhijeet from Tips2trades said, "Delta Corp has been very bearish on the Daily charts with strong resistance at Rs 158. Investors should buy only if Daily close is above this resistance for a target of Rs 176. Next strong support will be at Rs 121." 

In an interview with Business Today TV, Sudeep Shah, Head, Tech & Derivatives Research at SBI Securities gave a strict word of caution for Delta Corp. "For now, stay away from the stock. It is headed downwards," he warned investors who wished to catch the falling knives. 

Delta Corp is engaged in the operation of casino. Its segments include real estate, gaming, hospitality and others. The company operates its gaming and hospitality businesses under the DELTIN brand. The company owns three casinos in Goa, including Deltin Royale, Deltin JAQK and Deltin Caravela.    

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions. 

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