Delta Corp is another stock that has flattered to deceive. In August 2011, Rakesh Jhunjhunwala bought a massive chunk of 1.55 crore shares in the hope that the “first mover advantage” that the Company had in the casino and gambling business would give him bumper profits. He also declared publicly that he was “very excited” by the prospects of Delta Corp.
However, man proposes and God disposes. For one reason or the other, Delta Corp floundered and the “bumper gains” that Rakesh Jhunjhunwala was fantasizing about never came to be seen.
Just when everyone had given up on Delta Corp, Niraj Dalal of 3A Capital Advisors revived it and brought it back into the investors’ radar. In an interview to CNBC TV18, he recommended a buy of the stock on the basis that the management is now totally focused on the core business of casino/ gaming and that the gaming positions could double in the foreseeable future. He also explained that the casino business is a huge cash generator and that it enjoys abnormally high EBITDA margins of upto 45%. After a bit of number crunching, Niraj Dalal opined that the present gaming revenues of about Rs 250-300 crore (from Goa) can jump to Rs 500 crore as soon as the Daman operations start.
Well, Niraj Dalal’s analysis has received the ultimate endorsement now because Rakesh Jhunjhunwala bought a further chunk of 25 lakh shares of Delta Corp today at Rs. 89 each.
This means that Rakesh Jhunjhunwala’s present holding in Delta Corp is 1.80 crore shares valued at Rs. 176 crore at the CMP of Rs. 98.
Whether Niraj Dalal’s calculations come true and whether Rakesh Jhunjhunwala makes his much awaited bumper profits from Delta Corp requires to be seen.