Delta Corp Shares Jump 10% Following Demerger of Hospitality and Real Estate Business
shares of Delta Corp Ltd experienced a significant surge of nearly 10% in trading, following the company’s announcement regarding the demerger of its hospitality and real estate sectors. This strategic move aims to enhance the company’s focus on its core gaming business while creating a separate entity for its hospitality and real estate operations.
Main Points
Details of the Demerger
The board of directors at Delta Corp approved the demerger plan, which will result in the establishment of a new company named Delta Penland Private Ltd. (DPPL). This newly formed entity will take over the hospitality and real estate business, allowing Delta Corp to concentrate on its gaming ventures. The demerger is designed to unlock shareholder value, as Delta Corp has struggled to achieve appropriate valuations for its non-gaming segments in the past.
Under the proposed scheme, shareholders will receive one share of DPPL for every share they hold in Delta Corp. This ensures that all existing shareholders will maintain their proportional ownership in both companies once the demerger is completed. The company has indicated that this process will require approval from shareholders, stock exchanges, and various regulatory bodies, including SEBI and NCLT, and is expected to take between 10 to 12 months.
Current Business Operations
Delta Corp operates across several sectors, including casino gaming, online gaming, hospitality, and real estate. The hospitality division includes notable properties such as:
- Deltin Suites: A 106-room hotel with an integrated casino located in Goa.
- The Deltin: A five-star deluxe hotel in Daman.
- Marvel Resorts: A proposed 440-room hotel currently under construction in Goa.
- Future developments include an integrated resort with a water park on an 88-acre site in Dhargalim, Goa.
This diverse portfolio positions Delta Corp uniquely within the market, but the company’s primary identity has been tied to gaming activities. By separating these sectors, Delta Corp aims to clarify its branding and operational focus.
Following the announcement, Delta Corp’s stock price rose sharply, hitting a high of ₹141.85 on the Bombay Stock Exchange (BSE). Despite this positive movement, it’s worth noting that Delta Corp’s stock is down approximately 7.6% year-to-date. However, it has shown resilience with a 19% increase over the past six months.
Market analysts view this demerger as a beneficial restructuring move that could lead to improved operational efficiency and accountability within both entities. The separation is expected to provide each company with better access to capital and attract investors who are specifically interested in either gaming or hospitality sectors.
Delta Corp’s decision to demerge stems from a desire to create a cleaner corporate structure. The company believes that by segregating its gaming business from hospitality and real estate operations, it can enhance transparency and governance standards. This restructuring allows each business unit to pursue growth opportunities tailored to their respective markets without the complexities associated with cross-holdings.
Moreover, this move is seen as a response to recent challenges faced by the online gaming sector in India, including significant GST demands that have impacted profitability. By focusing solely on gaming through Delta Corp while allowing DPPL to manage hospitality and real estate operations, both entities can better navigate their specific industry challenges.
As Delta Corp embarks on this new chapter with the establishment of DPPL, stakeholders are keenly observing how this strategic shift will unfold. The success of this demerger will largely depend on regulatory approvals and market conditions over the coming months. Analysts suggest that if executed effectively, this could lead to enhanced shareholder value and operational success for both companies
