Nazara Technologies Ltd. share price target

We cut our PAT estimates by 15%/6% for FY26E/FY27E as we re-align our depreciation forecast & profitability assumptions for Nodwin and downgrade NAZARA to a HOLD (earlier BUY) with a revised TP of Rs1,241 amid 26% rise in stock price over the last 1 month. NAZARA reported an EBITDA margin of 9.8% (PLe 9.0%) while PAT was impacted by an impairment charge of Rs153mn pertaining to the erstwhile accessories business. We expect sales CAGR of 27.5% over next 2 years led by the recent acquisition of Curve Games with an...

15%/7% in FY26E/FY27E as we re-align our growth & profitability assumptions change in revenue recognition policy of Space & Time (Ad-Tech subsidiary). However, our PAT estimates have been revised downwards by...

Nazara Technologies (Nazara) delivered robust Q3FY25 growth, led by ad-tech and gaming segments. Growth in ad-tech was led by the recent acquisition in the UK (Space and Time Media).

Q1FY25 was muted, given sustained weakness in Kiddopia. While there were some positives such as ARPU improvement and reduction in churn, subscribers continued to decline.

On 3 July’24, we hosted Nodwin’s management for an interaction with investors. Nodwin has increased its stake in Freaks 4U gaming, from 13.51% to 57%.

Q2 is a seasonally weak quarter for Nodwin and GEL. Both these segments were impacted. However, strong growth in Sportskeeda and profitability improvement in Ad-tech helped balance the quarter. New acquisitions such as PFN and Animal Jam scaled up well in Q2FY24.

The pattern analysis on the weekly timeframe shows that the price action has entered into its stage 2 following a brief consolidation phase. The lateral trend following a 71% decline is a potential sign of accumulation and an indication that the drawdowns were finally arrested.

Nazara Technologies’ Q1FY24 revenue was below estimates due to 1) deferment of key eSports launches to H2CY23 and 2) decline in Adtech’s growth due to client rationalisation. However, EBITDA margin expansion (+340 bps QoQ) materialised in Q1FY24 broadly in line with our estimates.

Nazara Technologies’ Q4FY23 revenue was in line, but earnings beat our estimates as eSports EBITDA margin rose sharply (~430bps YoY). Also, Kiddopia’s EBITDA margin expanded ~680bps QoQ led by US$1.4 sequential decline in cost per trial. Number of Kiddopia subscribers grew marginally QoQ.

We initiate coverage on Nazara Technologies with BUY rating, given visibility of strong revenue growth in eSports and gradual profitability improvement in gamified early learning (GEL). The stock has corrected ~70% from its peak (of Rs1,601) and is now trading at its all-time low of Rs486.

challenging task in near term. While policy enactment has also resulted in elevation of CPT to US$33-34, acquisition of Datawrkz (an ad-tech company) can help optimize CAC and enhance yields, going ahead. Though Kiddopia is facing growth headwinds, E-Sports is expected to grow at 39.4% CAGR over FY22-FY24 backed by consolidation of OML. Further, revenue in RMG segment is also expected to rise by 2.4x over next 2-years post-acquisition of OpenPlay. Overall, we expect revenue revenue/EBITDA CAGR of 32%/28% over FY22-24E and the growth story remains intact despite near term...

Indian Gaming Industry: A huge growth opportunity ................................................4 Key drivers for mobile gaming growth in India...........................................................5 Company Overview............................................................................................................6 A di versified gaming and sports media platform .......................................................6 Investment thesis................................................................................................................8 Gamified early learning offers huge scalability ..........................................................8 Kiddopia is an emerging Ed-Tech play...................................................................8 Gamified early learning holds potential even in developed markets............... 11...

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