Delta Corp shares hit 3-year low after tax demands rise to Rs 23,200 crore: A timeline of events so far

Delta Corp saw a significant blow in July 2023 when the GST Council announced new tax rates affecting its core businesses, including casinos, horse racing, and online gaming. These new regulations included:

Uniform Tax Rate:

The GST Council decided to impose a uniform tax rate of 28% on casino operations, horse racing, and online gaming. This move significantly increased the tax burden on Delta Corp's revenue streams.

Casino Taxation: The tax would be applicable on the face value of the chips purchased in the case of casinos. This change affected the cost structure of the company's casino operations, reducing profitability.

Online Gaming Taxation: The tax would be applicable on the full value of the bets placed in online gaming, making it less attractive to potential users.

It all began on September 22 when Delta Corp disclosed that it has received a tax notice from the Directorate General of GST Intelligence in Hyderabad worth a staggering Rs 11,139 crore. This was inclusive of interest and penalties allegedly to have accrued between July 2017 and March 2022.

The initial shock was followed up by another notice on the same day as three of Delta Corp's subsidiaries - Casino Deltin Denzong in Sikkim, Highstreet Crusies and Entertainment and Delta Pleasure Cruise Company received tax demands worth Rs 628 crore, Rs 3,290 crore and Rs 1,765 crore respectively, taking the cumulative demand to Rs 16,823 crore.

Delta Corp's shares have been on a downward spiral since then. The stock has tanked on Monday as well, following the most recent tax demand.

In response, Delta Corp has stated that these amounts claimed are based on the gross bet value of all games played during the relevant period rather than the gross rake amount. "It has been an industry issue, and various representations have already been made to the Government at an industry level in relation to this issue," the statement said.

The company further said that it is committed to exploring all available legal remedies to challenge these tax demands and associated proceedings, deeming them arbitrary and contrary to the law.

Once the darling of high-net-worth investors (HNI), Delta Corp's shares have witnessed a dramatic reversal of fortunes. The stock has halved from its June 2023 high of Rs 260 in just 100 days.

The company's woes were compounded by disappointing financial results for the September quarter, failing to provide any respite to investors. Revenue, net profit and operating performance were flat compared to the same quarter last year.

Shares of Delta Corp have been in the Futures & Options ban for most part of the September and October F&O series. Being in the ban means no new positions can be created in the stock.

As Delta Corp navigates this tumultuous period, investors and analysts are closely watching to see whether the company can regain its lost glory or if the downward spiral will continue.