Delta Corp puts plans of online gaming unit IPO on hold due to GST uncertainties

Delta Corp puts plans of online gaming unit IPO on hold due to GST uncertainties

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Casino and online gaming operator Delta Corp has put the plans of taking its online gaming unit public on hold due to the uncertainties pertaining to the GST rate increase on the sector.

"The investing community obviously would want absolute crystal clarity when it comes to online gaming and they would want a clear picture as to what the way forward is and without which, nobody is going to put $1 into any new investment, especially in a sector which has this kind of overhang," Delta Corp CFO Hardik Dhebar said during the company's earnings call last week.

Keeping all of this in mind, Dhebar said that the IPO is on hold and the company will revisit this plan once complete clarity emerges.

As of the June quarter, the online gaming unit contributed 15 percent to Delta Corp's net revenue, excluding the GST component.

On July 11, the GST council decided to impose a 28 percent tax on turnover of online gaming companies, horse racing and casinos. However, there may be further clarification issued on the definition of online gaming during the council's upcoming meeting on Wednesday, August 2.

Tamil Nadu IT Minister Palanivel Thiaga Rajan called the claims of 28 percent GST leading to a demise of the online gaming industry as exaggeragted and emphasised the need for a harmonious balance between regulating the industry, generating revenue and supporting continued growth to boost the economy. You can catch that entire conversation here.

Dhebar mentioned that course correction has now begun with the IPO not happening in the near future and with all the uncertainty looming over the sector. He also mentioned that the online gaming sector on a segment revenue basis is still negative.

For the June quarter, the company's online gaming revenue stood at Rs 43.12 crore, which is little changed from last June's figure of Rs 43.83 crore, but lower than the March quarter number of Rs 47.41 crore. However, revenue from gaming operations, which is the company's core business, increased both year-on-year, as well as sequentially.

Delta Corp reported its highest-ever quarterly revenue during the April-June period.

"We are hoping to turn it positive (online gaming revenue) in the third quarter," Dhebar said.

Shares of Delta Corp returned to the Rs 200 mark last week for the first time after July 12, when it had its biggest single-day drop on record. The stock is still down 7.1 percent on a year-to-date basis.