I personally would have taken position in Delta if there online arm Adda52 was doing well. Coz thats one area they can expand tremendously in future as market is ripe for poker a sport to grow. I have been in the poker space for 10 years and i think i understand the space some what. Adda52 is one of the poker sites where in most of the top management doesnt even know the game. Poker used to be a small community and all that was needed was a customer centric approach… they just never cared… made policies in corporate meeting rooms without understanding what players want. Poker baazis management are all players themselves and they sucked the market share out of adda52 and now are doing brilliantly even in a tough gst scenario. I just dnt see add52 doing anything good and is losing more and more space day by day. Adda52 basically spent a lot in promoting poker as sport by doing events in companies and colleges accross the country but sites like baazi took advantage of the new folks coming in. And without a good online presence i dnt see much future in the gaming space for delta. And hence am nt entering this stock even at present pricing.

I hoped to start my own blog on investing where I work on various topics that can help my readers. I begun 2 months ago but this is my first attempt to publish them on valuepickr

one of my favorites: https://www.investingstoics.com/post/uncovering-opportunities-the-power-of-signalling-theory

I will summarize here, but I will share my thesis and financial model as well.

My bet was on the hotel sector, as the demand is increasing while supply will take a few years to catch up. This will lead to operating leverage and excess cash. My bet is that SAMHI will not only become profitable, but also deleverage its balance sheet as sectoral tailwinds are the ideal time to strengthen themselves.

My detailed reasoning
Thesis

Sales growth
FY25 will see addition of around 10-12% more keys which are being added or will get ready from renovation. Moreover, we can expect a RevPAR in double digits, although we are seeing RevPARs in high teen or in the twenties, I don’t know if that can sustain and hence a growth rate of around 13% has been assumed until FY27E
The decline in growth rate from FY26 and FY27 is because not a lot of keys are being added, and we can only expect the newly renovated ones to start(around 900 are under renovation)

EBITDA
The business aims to increase the margins to around 38-40%. Moreover, they shared a chart in one of their presentations that talks of types of costs. 20% was variable and after looking at it, I thought of an additional 20% being semi variable in nature. Despite the fact that semi variable won’t rise as much as revenue, I assumed 60% of the additional revenue each year trickling down to EBITDA.
That is how the model has been made!

Other income
It shouldn’t be negative the next few years because the current year had a one off event and the company took the worst possible scenario and wrote off 70 crores.

Depreciation
It shouldn’t really increase because no keys are being added, only existing portfolio is getting renovated

Interest costs
for FY25, the debt is assumed as 3.7x their EBITDA which is their target. The cost of capital for the business is around 10% and hence the interest cost. Although the management hasn’t guided towards interest cost reduction or anything for FY26 and FY27, the free cash generation does make me believe that a bit of reduction might happen. I have taken a moderate reduction in interest costs post FY25

The court cases you are referring to are rent disputes, eviction after the lease has expired and other matters.

In case of Walchand Peoplefirst, this plot of land was leased from Mumbai Port Trust in 1936. It is for a period of 99 years. So the lease is valid up to the year 2035.

Many companies which have leased land from Mumbai Port Authority continue to occupy the land despite the lease having expired. The lease which Walchand Peoplefirst has is still current. There is certain rent due which is disputed and shown as a contingent liability in the AR FY23. This amount disputed is shown as a contingent liability of Rs.2.23 crores. This is a small amount given the cash position of the company. It relates to the period 1st Jan 1999 to 31st March 2020. (See pg 42 of the FY23 AR).

There are many precedents of ports having monetized their land. There have been proposals of this sort for Mumbai Port Authority but nothing concrete has materialized.

Some proposals of the past:

Demand to stop eviction and reduce rents (March 2024):

Redevelopment possibility:

[2019]

Whether the proposal which gets finalized benefits the tenants or goes against them is something to be seen.