The Lottery Corporation Limited (TLC.AX): Downgrade to Sell on downside risks to FY27 earnings

Research evidence excerpt

The Lottery Corporation Limited (TLC.AX): Downgrade to Sell on downside risks to FY27 earnings

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03 Jul 2026 05:55:55 ET │ 17 pages

The Lottery Corporation Limited

(TLC.AX)

Downgrade to Sell on downside risks to FY27 earnings

CITI'S TAKE

The Lottery Corp will report FY26 results on Wednesday 19th August. We Sell ↓ from Neutral

expect the company to report a ~4% decline in EBIT to $621 million. We trim Price (03 Jul 26 16:00) A$5.48

our FY27e EBIT forecast by ~1% and sit ~5% below FY27e VA consensus EBIT, Target price A$5.00

driven by lower lottery turnover forecasts. TLC is also trading towards the

upper end of its historical 2yr forward relative PE and EV/EBITDA ranges. We Expected share price return -8.8%

therefore downgrade our recommendation from Neutral to Sell and our Expected dividend yield 3.5%

target price remains $5.00. Expected total return -5.3%

Market Cap A$12,197MLFLs remain soft — Powerball LFLs were up ~8% (weighted average basis) since

November 25 vs FY25, implying slightly less than half retention of the 16.7% price US$8,554M

increase. Additionally, Oz Lotto LFLs for the last six months are down ~13% YoY

(weighted average basis). We think this is mostly driven by weaker jackpot activity

(impacting prize reinvestment), though there may also be some cannabalisation

impact from the Powerball price increase. Price Performance

(RIC: TLC.AX, BB: TLC AU)Downside risk to FY27e VA consensus — Overall, our FY27e EBIT forecasts sit ~5%

below VA consensus, driven by our forecast turnover in Powerball (~3% below VA)

and Oz Lotto (~5% below VA). Our Powerball estimates imply 7% growth on FY25

normalised turnover. We think this is reasonable given Powerball LFL over the past

six months are up 7% (vs FY25). Our Oz Lotto projections imply 2% growth on FY25