Delta Corp’s shares experienced a significant surge of 10% during intraday trading today, following an announcement by the casino operator regarding its foray into the real estate sector through a strategic joint venture with Peninsula Land.
In response to this news, Peninsula Land’s shares also rose by 5%, reaching their upper circuit limit on the BSE.
At the start of the day, Delta Corp’s shares opened higher for the second consecutive session, commencing at ₹134.95 in comparison to the previous closing price of ₹133.95 on the BSE.
The stock continued to gain momentum throughout the session, reaching an impressive 10% increase to hit an upper circuit at ₹147.30, eventually closing at ₹142.65, reflecting a 6.5% gain on the BSE.
This rally boosted the company’s market capitalization to ₹3,819.75 crore, with 3.67 lakh shares changing hands, exceeding the two-week average volume of 2.91 lakh scrips.
Simultaneously, Peninsula Land, the real estate arm of the Ashok Piramal Group, concluded the day with a 5% increase, reaching ₹48.63 on the BSE.
Delta Corp officially disclosed in an exchange filing that it will establish a joint venture (JV) with Peninsula Land, marking its entry into the real estate sector.
The JV will commence with an initial capital outlay of ₹250 crore, with Delta Corp as the major shareholder.
Peninsula Land, a well-established real estate company, operates in various segments, including commercial offices, retail, residential, IT, and SEZ projects.
The company has successfully completed 19 projects and currently has 2 projects under construction.
In this strategic move, Delta Corp will make a substantial investment of ₹99.99 crore in Peninsula Land, and in return, Peninsula Land will issue 1.5 crore equity shares and 77.27 lakh compulsory convertible debentures (CCDs) at ₹44 per share to Delta Corp.
CCDs are a type of bond that must be converted into stock by a specified date.
Delta Corp explained its rationale for expanding into the real estate sector, citing its past successful project executions and its promoter’s extensive 35-year experience in the industry.
As the majority stakeholder in the JV, Delta Corp intends to focus on executing projects primarily in Mumbai and Goa while maintaining a debt-free status.
Jaydev Mody, Chairman of Delta Corp, emphasized the growth potential in India’s real estate sector, given increasing regulations, growing demand, and the preference for established brands.
Rajeev Piramal, Vice Chairman and Managing Director of Peninsula Land, expressed enthusiasm for the new phase of growth and the opportunity to unlock value in the real estate sector.
The decision to enter the real estate sector comes as Delta Corp explores long-term growth opportunities due to the deferment of its flagship project in Dhargalim, Goa, which was initially planned with an investment of ₹3,000 crore across 90 acres of land.
Furthermore, Delta Corp recently received interim relief from the Bombay High Court regarding a Goods and Services Tax (GST) case, involving a ₹16,195 crore GST notice issued by the Directorate General of GST Intelligence for shortfall tax payment.
The court has restrained tax authorities from issuing a final order on the GST notice without prior permission from the court.
Between September and October this year, Delta Corp and its subsidiaries received notices totaling over ₹23,000 crore for tax payments related to the period between July 2017 and March 2022.
This includes the initial notice of ₹16,822 crore for shortfall tax and additional notices of ₹5,682 crore against its subsidiaries, along with another notice worth ₹6,384 crore from the DG GST Intelligence, Kolkata.