Analysts at global brokerage Jefferies met Nitish Mittersain, Founder and MD of Nazara Technologies, who highlighted that the growth outlook for Nodwin and Sportskeeda remains strong. The recent price increases in Kiddopia and acquisition of Wildworks will help drive growth in the early learning segment.
“While RMG remains an attractive market, Nazara Tech is unlikely to make a big play before regulatory clarity emerges,” the note stated. Jefferies has raised its estimates by 5-13% and has maintained its Buy rating on Nazara Tech shares with revised target price of ₹860 apiece (from ₹780 earlier) as it believes that the company is ‘making the right moves’. The tech stock is down about 37% this year so far.
The management highlighted that since acquiring Nodwin, they have endeavored to diversify Nodwin from being just an e-sports event management firm, to a company that is driving gaming engagement. It has forayed into content creation around eSports (Playground) and offering accessories (Planet Superheroes, Brandscale) through its recent acquisitions. Nodwin’s balance sheet still has over ₹400 m cash which will be utilized to further build on these initiatives, it highlighted.
“Nazara acquired a 100% stake in Wildworks for $10 m implying 0.8x EV/sales. Wildworks is a game developer catering to kids aged 8-12 years with ‘Animal Jam’ its key IP. Nazara plans to revive growth by increasing spends on user acquisition and driving content updates. The acquisition will add US$ 12m revenue to Nazara’s revenues and help solidify Nazara’s presence in the Gamefied Learning segment in the US,” Jefferies added.
The brokerage house believes that Nazara Tech is a distinct play on the gaming ecosystem, offering exposure to diverse gaming segments, geographies, and revenue streams and strong growth prospects in eSports segment, driven by strong pickup in gaming in India and price increases in Gamified learning to support subscriber acquisitions.
It sees stronger-than-expected revenue growth, particularly in early learning and eSports, improving unit economics in early learning, successful acquisitions, and easing regulations in real-money gaming as key catalysts.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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