India’s only listed gaming company has notched up a blockbuster run this year, with its stock running up 128%. It did take a knock last November after demonetization and hit a low of Rs.95 but since then has rebounded sharply to hit a 52-week high of Rs.290. This extraordinary run hasn’t gone unnoticed with marquee investor Rakesh Jhunjhunwala and promoter Jaydev Mody deciding to trim their holdings in favour of SmallCap World Fund.
Jhunjhunwala has sold 1.25 million shares through Rare Enterprises and 2.5 million shares through Rekha Jhunjhunwala netting Rs.104 crore while Mody disposed 1.82 million shares each through Aarti J Mody Trust and Anjali J Mody Trust for Rs.102 crore. Post the transaction, the holding of SmallCap World Fund stands at 3.82%.
Over the past year, promoter holding has declined from 40.78% for the quarter-ending September 2016 to 35.29% for the quarter-ending 2017. Foreign portfolio investors holding, too, has marginally reduced from 11.3% to 10.2% during the same period with East Bridge Capital Master Fund selling down from 2.6% to 2.25%. The share of domestic mutual funds, on the other hand, has increased from an insignificant 0.43% to 8.87%, during the same period, with HDFC Mutual Fund holding the lion’s share at 5.7%.
The stock did witness some turbulence in April due to the news of possibility of merger of the union territory Daman with Gujarat [currently casinos are allowed only in Goa, Daman and Sikkim], there was a near 20% decline in the price but it was soon back to rocket mode on the back of strong quarterly results. For Q2FY18, the firm’s profit increased 41%, from Rs.30.6 crore to Rs.43 crore.
At its current price of Rs.265, the stock trades at 27x FY19 estimates. Analysts reckon that the acquisition of Adda52, India’s leading poker site, coupled with increased footfall in Sikkim and Goa casinos and growing traction witnessed in the online gaming business will drive future growth.