Gaming and sports media platform expands into a wider domain for higher growth potential
Nazara Technologies made a stellar debut on the bourses on Tuesday. It listed on the NSE at 81 per cent premium at Rs 1,990 and on the BSE at a premium of 79 per cent against its issue price of Rs 1,011. It moved up to Rs 2,026.90 on the BSE during the day.
The counter clocked a combined trading volume of 83.29 lakh shares on both the exchanges. Against the company’s paid-up capital of 3.04 crore shares, the number of shares changed hands on the debut day was in excess of 25 per cent of the total capital.
The initial public offering (IPO) of Nazara Technologies also received an excellent response from all types of investors, with the issue getting subscribed 175 times. The non-institutional investors’ portion subscribed a whopping 390 times, while that of qualified institutional buyers (QIBs) by 104 times and retail investors by 7.55 times, according to exchange data.
Most of the brokerage houses had a ‘subscribe’ rating on Nazara as they believed the gaming industry is set to record over 30 per cent CAGR over 2020-2023 on the back of high mobile penetration, increasing internet penetration and increasing number of gamers.
Nazara Technologies is an Indian gaming and sports media platform with a presence in India, North America, Africa and the Middle East. Its product portfolio includes offerings across interactive gaming, eSports and gamified early learning ecosystems like World Cricket Championship & Carrom Clash in mobile games, Kiddopia in gamified early learning, Nodwin & Sportskeeda in eSports and eSports media, and Halaplay and Qunami in skill-based, fantasy and trivia games.
The company derives revenues mainly from subscription fees paid by users for accessing gamified early learning content as well as from eSports business. These two segments cumulatively accounted for 71 per cent and around 42 per cent of operating revenues for April-September 2020 and FY20, respectively.
Over the last three fiscals, the company has changed its gears and entered newer business segments such as eSports, Gaming like World Cup Cricket, HalaPlay, and Fantasy Sports, which offer high growth potential.
Although this growth has come at the expense of EBIDTA margins and return ratios, the pivot was an essential strategy to foray into diverse lucrative opportunities, leveraging an ecosystem of partners and creating business moats. As the synergies and growth from these investments kick in, the margin profile and consequently return ratios are expected to return to a path of steady growth, Geojit Capital had said in its IPO note.