Target: ₹834

CMP: ₹717.20

We increase our EBITDA estimates by 8%/4% for FY24E/FY25E as were- align our margin assumptions for Kiddopia and Animal Jam amid strong performance in Q1-FY24; tweak our A&P spends outgo; and build-in recovery in Nodwin business, despite EBITDA losses during the quarter as multiple IP’s are lined up in coming months.

Nazara reported a mixed bag of results with revenue miss of 10 per cent, however, EBITDA margin was above our estimates of 12 per cent. Despite ongoing challenges in Ad-Tech (loss of a large client), Kiddopia (stagnant subscriber base) and Real Money Gaming (GST levy of 28 per cent on full bet value), return of BGMI and strong traction in SportsKeeda is likely to drive sales/EBITDA CAGR of 20 per cent/39 per cent over FY23- FY25.

Moreover, Nazara had cash balance of ₹620 crore as of FY23 while Nodwin (Esports subsidiary) raised ₹230 crore in May-23. In addition, there are plans to further raise ₹750 crore bn in near future.

We believe the cash ammunition will act as growth capital to expand inorganically from hereon. Retain our Buy rating with a DCF based TP of ₹834 (earlier ₹804).

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