Share of Rakesh Jhunjhunwala’s portfolio Nazara Technologies rose nearly 6% to Rs 1,055.40 apiece on BSE on Thursday after the gambling stock hit a new all-time low of 998.05 Rs in the previous session. The stock hit a lifetime high of Rs 3,356 each in October last year; however, since then, this Jhunjhunwala stock has corrected over 68%. Year-to-date (YTD), Nazara Tech stock has lost over 57% of its price. National research and brokerage firm JM Financial Services has launched coverage on Nazara Technologies, saying the valuation is “rich”.
JM Financial has recommended retaining the title as it believes that in the short term eSports will continue to drive the growth of this gaming title, aided by recent acquisitions. eSports is Nazara’s largest segment (49% revenue share, FY22) and fastest growing. Nodwin, Nazara’s eSports subsidiary, has an 80% market share in India’s nascent ($100 million) but growing eSports market. Nazara’s partnership with global eSports platforms, game publishers and brands uniquely positions it to lead eSports penetration in India, JM Financial said.
JM Financial’s analysis indicated that Nazara was able to increase its investments where the additional investment needs were neither very high nor margin dilutive. For example, Nazara scaled eSports and Kiddopia after acquiring them due to market leadership (Nodwin). In fantasy sports, on the other hand, where higher competitive intensity required significant burn for customer acquisition, the company scaled back. The same goes for freemium, which slowed after its acquisition.
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Nazara Tech stock price underperforms Nifty 50 YTD
Nazara Technologies’ share price has corrected 57% year-to-date and underperformed the Nifty (-11.4% year-to-date), which should limit a significant decline by from current levels, noted JM Financial. He also added that increasing competitive intensity and the company’s focus on margins are limiting near-term growth triggers.
Nazara Tech sets record date for bonus issue
Nazara Technologies’ Board of Directors has set June 27, 2022 as the record date for the proposed free share issue. The company’s board of directors has approved a bonus of one share for each share held by shareholders.
“It is hereby informed that the Board of Directors of the Company has set Monday, June 27, 2022, as the record date, for the purposes of determining the eligibility of shareholders for the issuance of free participating shares of the Company in the proportion of one new fully paid-up share of Rs 4 each for each fully paid-up share of one existing share of Rs 4 each held,” Nazara Tech informed in an exchange filing last week. Free shares are additional fully paid shares issued by a company to its existing shareholders.
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