Target: ₹920
CMP: ₹735.95
Nazara Technologies, is a unique diversified gaming company that offers an unmatched opportunity in the multi-year-high-growth Indian gaming industry.
Over FY17-FY21, Nazara steered its business from VAS provider to a diversified gaming platform with six strategic acquisitions. Post IPO (Last 5 quarters), Nazara has done 10 more investments by pouring in ₹560 crore to build a deeper penetration within the gaming ecosystem (a wider net to capture more opportunities and strengthen existing verticals).
We see this as Nazara’s 2nd avatar as it moves towards becoming a diversified gaming platform with strong content IPs. Nazara’s increased transaction closures in LTM suggest strong acumen for adding more deals in attractive markets given the weakening of valuations across the board in the last 12 months.
Nazara’s key investments have delivered well on value and growth. Key investments (Nodwin, Kiddopia, Sportskeeda) have even turned to become leader in their industry. The learning curve of last 4 years has led to refinement of their strategy to focus on key competencies, and identify large opportunities in early stage companies.
We maintain our Positive view on Nazara with a DCF based target price of ₹920 implying 4x on its EV/Rev in FY24 (implies PER of 58x and PEG of nearly 1.5x).