The sharp decline in Delta Corp shares price on Wednesday has left investors in a state of concern. The primary trigger for the downfall was the decision made by the GST Council, to impose a hefty 28% Goods and Services Tax (GST) on online gaming and casinos.
On July 12, the stock closed at Rs 190 on the NSE, which was down 22% from the previous day. During the day, it went as low as Rs 172. The company’s market value decreased by around Rs 1,500 crore, which means it lost all the gains it made this year. This drop was the biggest in a single day that has ever happened to the stock.
On July 13, the shares of Delta Corp slumped again 5 percent plus. It means in two days it has fallen 27 percent eroding investors’ wealth massively.
The Impact of GST Council’s Decision
The Indian government has imposed a 28% tax on online gaming, casinos, and horse racing. It has greatly impacted Delta Corp, a company that operates casinos and online games. This tax reduces the amount of money Delta Corp earns, making it harder for them to make a profit.
The tax is based on the full value of face value that people bet when they gamble on any platform. The high taxes make it difficult for Delta Corp to make money. But it helps the government collect more taxes from people who bet on gambling.
Under the new rules, players now have to pay a 28% tax on the full value of the chips they buy, which means they have less money to bet with. In the past, offline casinos paid a 28% tax on the total money they earned from gambling.
This change makes it harder for casino players to play. It might badly affect the amount of money the company makes from casinos and online games.
Notable investor Late Rakesh Jhunjhunwala had previously included Delta Corp in his portfolio. However, he completely exited his position in June 2022.
Uncertainty Surrounding Deltatech Gaming’s IPO
Delta Corp has a subsidiary called Deltatech Gaming Limited. They were planning to launch an IPO. However, because of the new GST regulations, the launching of the IPO may be delayed for now. Many investors were eagerly awaiting the IPOs. This uncertainty makes it unclear how the company will plan for the IPO.
Daman Casino License
Investors were excited about Delta Corp possibly getting a license to open a casino in Daman. Delta Corp has been eagerly anticipating the issuance of a casino license in Daman for quite a while.
However, it is still not clear if Delta Corp will get this license or not. This uncertainty makes it hard to know how the company will grow in the future and make more money from different sources.
Currently, Delta Corp manages two offshore casinos. One in Goa, at a luxurious 5-star hotel, and one casino each in Sikkim and Nepal.
Expert Opinions and Recommendations
Vinit Bolinjkar, who is in charge of research at Ventura Securities, suggests that people who already own shares in Delta Corp should think about selling them. He says that the high taxes will have a bad effect on the company’s ability to make money, and it might be a good idea to sell the shares and either make a profit or minimize the loss.
Aaditya Shah, who works as the COO of IndiaPlays, a company that offers online gaming, thinks that it is important to find a balance when it comes to taxes in the gaming industry. He knows that the increased tax rate makes things harder, but he believes that it’s important to have fair competition and make sure that the industry can grow and be successful in the long term.
Suman Bannerjee, who works as the CIO of Hedonova, a Hedge Fund in the US, supports the decision of the GST Council. He thinks that high taxes on activities like gambling and horseracing can discourage people from taking part, especially people who are not very rich. Bannerjee believes that these activities should be discouraged because they can have negative effects on society.
What is the Forecast for the Delta Corp Shares?
NSE: DELTACORP: The chart structure of Delta Corp shares is showing some concerning signs. There has been a significant decline of 27 percent in just two days, which has made the stock more vulnerable. On the weekly chart, the stock recently broke below the crucial zone of 210–230, indicating a bearish trend. Furthermore, it dropped decisively below the psychological level of 200.
Based on the price action and chart analysis, the zone between 195–200 will likely act as a strong resistance area for Delta Corp. It will be important for the stock to close above this upper band in order to signal a potential reversal. Until then, any price bounce is likely to be met with selling pressure. On the downside, there is a notable demand zone between 175–160, which could provide support to the stock.
Considering the chart structure, there is a higher possibility that the stock may retest the lower band of the range in the coming days. But breaking below this lower band would indicate further downside potential, with potential support levels around 139.
As traders and investors, it is crucial to keep an eye on the levels of 200 and 160 for potential trading opportunities. So, a violation of either level could establish a new range for Delta Corp, offering new trading possibilities.
| 52 Week High (28-Jun-2023) | 259.95 |
| 52 Week Low (12-Jul-2022) | 172.30 |
Disclaimer: This blog article is for learning purposes only. So, one should seek guidance from certified professionals approved by SEBI before making any trading and investment choices.
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