Delta Corp stock takes a steep 28% dive as government imposes 28% GST on casinos.
What is the Reason for Delta Corp Falling?
Delta Corp, a casino operator based in Goa, witnessed a significant drop in its shares on Wednesday, falling as much as 28% to Rs 178.20, nearing its lowest point in the past 52 weeks. This decline came after the GST Council approved a 28% GST levy on online gaming, horse racing, and casinos at their full value.
Impact on Other Firms
Shares of Nazara Technologies, a digital gaming and e-sports company, initially dropped more than 14% during morning trade. However, the company later clarified that its skill-based real money gaming business accounted for only 5.2% of its FY23 revenues. As a result, the shares recovered most of the earlier losses.
How the Industry is reacting?
Online gaming companies expressed concerns on Tuesday after the decision to impose a 28% GST, stating that it would restrict their capacity to invest in new games and adversely affect cash flows and business expansion. The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee, and Winzo, criticized the council’s decision as unconstitutional, irrational, and unfair.
The decision unfairly treats online skill gaming as gambling, disregarding established legal principles. This could have a severe impact on the Indian gaming industry, potentially resulting in significant job losses. AIGF CEO Roland Landers believes that illegal offshore platforms will be the only ones benefiting from this decision, while the industry and the country will face negative consequences.
Is this the Right Time to invest in Delta Corp Shares?
Looking at the technical indicators, Delta Corp’s relative strength index (RSI) currently stands at 53.1, indicating that the stock is neither oversold nor overbought. Additionally, the stock has shown average volatility over the past year, with a beta value of 1.
Regarding the stock’s outlook amid the recent market decline, analysts’ opinions vary, but their perspectives were not specified.
According to analysts, the recent decision has dealt a significant blow to the affected companies. They recommend that investors consider exiting these stocks whenever they get the chance. G Chokkalingam, the Founder and Managing Director at Equinomics Research, believes that the increased GST rates will particularly impact Delta Corp, a company involved in various gaming and hospitality sectors.
Furthermore, the expert suggests that the stocks’ valuations were already stretched, and without any growth triggers in sight, their premium status is at risk. The growth story that supported these stocks will likely fade, resulting in negative growth and a decline in price-to-earnings (P/E) multiples. Chokkalingam advises investors to avoid investing in these stocks.
To Summerize
Delta Corp is a company engaged in various gaming and hospitality sectors in India. It operates in areas such as casino gaming (live, electronic, and online), online gaming, hospitality, and real estate. The recent decision to increase GST rates has had a significant impact on the company and the overall gaming industry. Analysts have expressed concerns about the prospects of Delta Corp and suggest caution when considering investments in the stock. Technical indicators, such as the relative strength index (RSI) and beta value, provide insights into the stock’s current trading status and historical volatility. However, opinions on the stock’s outlook amid the market decline vary among analysts.
Learn how utilizing the Momentum Strategy can boost your intra-day trading skills and take your trading abilities to new heights. Click Here To Register
Also, Check out How India will surpass the other Nations and become the 2nd Largest Economy in the World by 2027.
Disclaimer: The information provided in this Blog is for educational purposes only and should not be construed as financial advice. Trading in the stock market involves a significant level of risk and can result in both profits and losses. Spider Software & Team does not guarantee any specific outcome or profit from the use of the information provided in this Blog. It is the sole responsibility of the viewer to evaluate their own financial situation and to make their own decisions regarding any investments or trading strategies based on their individual financial goals, risk tolerance, and investment objectives. Spider Software & Team shall not be liable for any loss or damage, including without limitation any indirect, special, incidental or consequential loss or damage, arising from or in connection with the use of this blog or any information contained herein.
