02 Aug , 2022 By : Kanchan Joshi
Shares of Nazara Technologies surged over 13% on the BSE to Rs720 apiece in Tuesday's early deals. The tech stock has rallied more than 40% in last five trading sessions on the back of strong earnings for the first quarter ended June 2022. As per the recent shareholding pattern on the BSE, Indian ace investor and stock market trader Rakesh Jhunjhunwala holds 10.03% stake in Nazara Tech as of June 2022.
“Nazara reported strong 70% YoY growth in 1QFY23, driven by eSports and acquisitions. EBITDA margin declined 945bps YoY, mainly due to cost pressure in early learning. Growth outlook in eSports remains strong, and price increases should support growth in Kiddopia," said global brokerage Jefferies in a note.
It has raised estimates by 6-24% and expects Nazara Tech to deliver 24% revenue/EBITDA CAGR over FY23-26E. The brokerage has upgraded Nazara Tech shares' rating to Buy with target price of Rs780 apiece on strong growth prospects.
“Esports delivered strong revenue growth of 77% YoY, with Nodwin's revenue up 68% YoY and Sportskeeda revenue up 103% YoY. Nodwin's growth was primarily driven by acquisitions (OML Entertainment, Publishme, Planet Superheroes, Brandscale). Nodwin's vision to expand offerings into gaming accessories, merchandise, and scale-up of media revenues provides strong growth outlook. Sportskeeda's revenue more than doubled YoY, on account of continued traction in the US," the note stated.
Nazara is a distinct play on the gaming ecosystem, offering exposure to diverse gaming segments, geographies, and revenue streams. Strong growth prospects in eSports segment, driven by strong pickup in gaming in India and price increases in Gamified learning to support subscriber acquisitions and the stock offers upside post recent correction, explained Jefferies.
“In RMG, Nazara is seeing healthy 12% QoQ growth in Openplay. In the Freemium segment, growth in 1Q picked up to 28% YoY, supported by IPL. Management is focusing on newer games/business models and targeted M&A in this segment. Telco segment revenues declined by 16% YoY, and Nazara is looking to arrest the decline in this segment through telco partnerships," Jefferies added.
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