Nazara Technologies climbs 16% after strong June quarter results

Shares of Nazra Technologies rose 16 per cent to Rs 616 in Monday’s intra-day trade. The spike comes after the mobile gaming company posted over 22 per cent year-on-year (YoY) growth in consolidated net profit to Rs 16.5 crore in the April-June quarter (Q1FY23). Meanwhile, revenue grew 70 per cent to Rs 223.1 crore from Rs 131.2 crore in the year-ago period.

Despite today’s rally, Nazara Technologies stock is down over 66 per cent from its 52-week high of Rs 1,601, which it touched on October 11, 2021. So far this year, the stock is down more than 48 percent. In comparison, the Nifty 50 and the S&P BSE Sensex have each lost over 2 per cent during the same period.

The company’s EBITDA was flat at Rs 30 crore on a year-on-year basis. However, sequentially, it increased to 102 per cent from Rs 14 crore in Q4FY22. Meanwhile, Ebitda margin shrank to 13.5 per cent in the quarter under review, from 22.9 per cent in Q4FY22.

Segment-wise, e-sports contributed the most to total revenue of Rs 102.3 crore in Q1FY23, up 92 per cent YoY from Rs 53 crore in Q1FY21.

Gamified early learning and ed tech businesses were the other top contributors to business revenue of Rs 52 crore and Rs 32 crore, respectively. However, the expenditure increased to Rs 207 crore in Q1FY23 from Rs 114 crore in the corresponding quarter of the previous fiscal, due to higher advertising spend.

Going forward, the Management is confident of completing its growth plans prepared for FY 2013. Mohit Agarwal, CEO, Nazra Technologies, said, “The company will continue its growth journey both organic and inorganic. We want to increase our presence in the ‘freemium’ segment, especially in developed markets, going forward this financial year.”

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During the quarter, the company acquired stake in companies such as Dataworks Business Solutions, Paper Boat Apps, Nodewin Gaming and Absolute Sports. Earlier on May 13, 2022, the board of the company had approved issuance of bonus shares in the ratio of 1:1 to the existing shareholders.

Analysts at JM Financial expect the company to post higher growth in FY13 on account of the acquisition. However, they are cautious about their medium-term growth.

“Except in e-sports, we find it difficult to string a coherent growth strategy out of Nazara’s diverse, often segregated assets. In addition, our conservative outlook also stems from the company’s limited presence in Real Money Gaming (RMG) , which is the largest revenue pool in India’s online gaming space. While the Q1 beat should help reverse the recent stock corrections, we await more evidence of growth,” the brokerage firm quoted Rs 540 per share. While sharing the ‘hold’ stance with the target price of Rs.

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