Casino operator Delta Corp forays into real estate; stock jumps 6%

Shares of Delta Corp surged 10% intraday today after the casino operator said it has entered into the real estate sector through a joint venture with Peninsula Land. Reacting to the news, Peninsula Land shares rose 5% and got locked in its upper circuit limit on the BSE.

Early today, Delta Corp shares opened higher for the second straight session at ₹134.95 against the previous closing price of ₹133.95 on the BSE. Extending opening gains, the stock gained as much as 10% to hit its upper circuit at ₹147.30, before settling at ₹142.65, up 6.5% on the BSE. The market capitalisation rose to ₹3,819.75 crore, with 3.67 lakh shares changing hands over the counter as compared to the two-week average volume of 2.91 lakh scrips.

In a similar trend, shares of Peninsula Land, the real estate arm of the Ashok Piramal Group, ended 5% higher at ₹48.63 on the BSE.

In an exchange filing today, Delta Corp said that it will form a joint venture (JV) with Peninsula Land, which will help the company expand into the real estate sector. The JV will be started with a capital outlay of ₹250 crore where Delta Corp will be the major shareholder.

Peninsula Land is a real estate company which operates in the commercial office and retail, residential, IT and SEZ segments. It has successfully executed 19 projects and 2 projects are under construction.

The gaming company, which owns and operates casinos and hotels in Goa, Sikkim, Daman, and Nepal, will make a strategic investment of ₹99.99 crore in Peninsula Land. In return, Peninsula Land will issue 1.5 crore equity shares and 77.27 lakh compulsory convertible debentures (CCDs) at ₹44 to Delta Corp. The CCD is a type of bond that must be converted into stock by a specified date.

“The need for expansion in the real estate sector stems from the fact that Delta has in the past successfully executed several projects and exited profitably coupled with its promoter having over 35 years of experience in this industry,” Delta Corp says in a BSE filing.

Delta, being the majority stakeholder in the JV, proposes to execute projects mainly in Mumbai and Goa and will continue to be a debt-free company.

Jaydev Mody, Chairman, Delta, says, “Today, India’s real estate sector is poised for growth and presents attractive opportunities to businesses. The industry is consolidating as regulations increase, demand grows, and customers increasingly seek established and trusted brands. Via this strategic venture with PLL, Delta is perfectly positioned to take advantage of this new phase of growth in India’s realty space.”

Rajeev Piramal, Vice Chairman and Managing Director of PLL says, "Over the past few years, Peninsula Land has executed a clear strategic vision to execute projects and reduce debt. We have demonstrated our commitment to stakeholders and customers. I am thrilled to announce a new phase of growth with Delta that will allow us to unlock the immense value that exists in the real estate sector today.”

As per the release, the company had free reserves and cash flows after its flagship project at Dhargalim, Goa got deferred, which prompted it to explore long-term growth opportunities in the realty sector.

Delta Corp, the only listed casino operator in India, was planning to invest ₹3,000 crore to set up an integrated resort-cum-casino township that is across 90 acres of land at Dhargalim, Pernem. However, the project has been deferred due to undisclosed reasons.

Last month, the company got interim relief from Bombay High Court in a Goods and Services Tax (GST) case. The case pertains to ₹16,195 crore GST notice issued by the Directorate General of GST Intelligence for the payment of shortfall tax. The Goa Bench of Bombay HC has restrained tax authorities from passing any final order on the GST notice against the casino firm without prior permission from the court. 

Between September and October this year, Delta Corp and its subsidiaries received over ₹23,000 crore tax payment notices from DG GST for the period between July 2017 and March 2022.

In September, the company received the first notice worth ₹16,822 crore from the Directorate General of GST Intelligence for payment of shortfall tax, which included alleged tax liability of ₹11,139 crore along with interest and penalty for the period from July 2017 to March 2022, and notices of ₹5,682 crore against three of its subsidiaries — Casino Deltin Denzong, Highstreet Cruises and Delta Pleasure Cruise Company. Other than this, the casino operator received another notice worth ₹6,384 crore from the DG GST Intelligence, Kolkata, in October. 

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