September 25, 2023
New Delhi, India
Delta Corp Stock Price Tumbles to 143.65 INR, Marking an 18.10% Decline Today
In a significant development for the Indian gaming industry, Delta Corp, a prominent casino operator, is grappling with a daunting tax notice from the government.
The Directorate General of GST Intelligence issued a staggering tax demand totaling ₹111.4 billion on Friday, covering the period from July 2017 to March 2022. The demand includes taxes, interest, and penalties, which have sent shockwaves through the financial landscape of the company.
Stock Plummets
The fallout from the tax notice was immediately felt in the stock market, with Delta Corp shares plunging nearly 20% to a 52-week low of ₹140 on the National Stock Exchange. This sharp decline reflects investor concerns about the company’s financial stability in the face of such a substantial tax obligation.
Exceeding Market Capitalization
The tax payment demand is notably higher than Delta Corp’s current market capitalization, which stands at approximately ₹42.3 billion. This dissonance raises questions about the company’s ability to meet the tax liability without severe financial consequences.
GST Rate Increase Adds Pressure
Delta Corp was already under pressure due to the recent increase in the Goods and Services Tax (GST) rate on money collected by gaming companies from customers, which was raised from 18% to 28%. This had negatively impacted the company’s stock price and market capitalization before the tax notice.
Legal Challenge on the Horizon
In response to the tax notice, Delta Corp has announced its intention to challenge it through legal channels. This indicates the company’s belief in the possibility of a more favorable resolution or dispute regarding the tax demand.
Industry-Wide Issue
Delta Corp has emphasized that the tax demands are not unique to the company but are a broader issue affecting the gaming industry in India. This acknowledgment raises concerns about potential challenges other gaming companies may face in the near future.
F&O Ban Adds Volatility
Currently, Delta Corps share is in the F&O (Futures and Options) ban, restricting the creation of new positions in the stock. This regulatory constraint could intensify the stock’s volatility and limit trading options for investors.
Revenue Impact
It is worth noting that the stock’s decline in July 2023, following the GST rate increase, resulted in a market capitalization loss exceeding the company’s entire revenue for the financial year 2023, underscoring the gravity of the financial challenges facing Delta Corp.
The Indian gaming industry will be closely watching Delta Corp’s efforts to navigate this substantial tax demand, the outcome of its legal challenge, and the broader implications for the sector. The unfolding developments have injected uncertainty into the company’s financial future and raised important questions about the regulatory environment for gaming businesses in India.
