Nazara Technologies IPO analysis!

Nazara Technologies IPO analysis!

Last updated: 16 Mar, 2021 | 11:50 am

Nazara Technologies IPO analysis!

Nazara Technologies is set to raise up to Rs 538 crore via IPO which opened on 17th March, Wednesday. Here are the details:

About Nazara Technologies

  • Nazara Technologies is an India based diversified gaming and sports media platform . It has presence across emerging and developed global markets such as Africa and North America. 
  • The company owns some of the most recognizable Intellectual Property, including WCC & CarromClash in mobile games, Kiddopia in gamified early learning, Nodwin & Sportskeeda in eSports and eSports media, and Halaplay Technologies and Qunami in skill-based, fantasy & trivia games. Nazara was among the first entrants in India, in eSports through Nodwin and cricket simulation through Nextwave. 
  • Nazara Technologies derives nearly 41% of its revenue from India, with North America contributing an equal share in FY21 from 12% a year ago. That came after it acquired Kiddopia, a learning application for kids, in July 2020.
  • The company has 5 sources of revenue including: Gamified early learning (39.25%), eSports (31.78%), Telco subscription (21.33%), Freemium (4.5%) and Real money gaming (3.14%). 
  • Its telco subscription offerings comprise over 1,021 android games, which primarily target mass-mobile internet users in emerging markets, including first-time mobile gamers.
  • There is also significant hype around the IPO as the company is backed by investments from marquee investors such as  Rakesh Jhunjhunwala, Utpal Sheth and IIFL. Rakesh Jhunjhunwala, who has around 10.8% stake, has decided to stay invested.


  • According to its offer documents, Nazara Technologies has no comparable listed peers.
  • The company earns a bulk of its revenues from North America, as shown below.

Gaming landscape in India

  • India’s online gaming industry has already attracted $350 million in investments from venture capital firms between 2014-2020. Currently, there are over 400 gaming startups in India.
  • India gaming market is at around 1.6 billion compared to around $40 billion in the United States. It is expected to grow at 31.7% CAGR over 2020-23 due to the growth of digital infrastructure and significant rise in quality and engaging of gaming content. 
  • Key drivers of growth are a large population of Gen Z and millennials, availability of cheap smartphones, high-speed internet and reduction in data prices.

Various verticals and their contribution to revenue


  • The company has raised Rs 12.63 crore (in two tranches in 2005 and 2007) and Rs 76.53 crore in 2018. As a result, the company has been EBITDA positive and  generated sufficient cash flows from operations. 
  • The company achieved EBITDA of Rs 12.66 crore in the 1HFY21, as compared to Rs 9.11 crore in FY20. EBITDA margins in the six month period ended September 2020 stood at 6.11%, as compared to 3.48% in FY20.
  • Nazara reported a 46% YoY growth in revenue to Rs 247.51 crore in FY20 with loss at Rs 26.61 crore compared to profit of Rs 6.71 crore in previous year. 
  • For the six months period ended September 2020, the company reported loss at Rs 10.11 crore on revenue of Rs 200.46 crore. The company has seen robust topline growth in this period, as people took to internet-based entertainment amid pandemic-induced lockdowns.
  • For the last three fiscals, Nazara Technologies has posted an average EPS of Rs. 1.88 and an average RoNW of 1.30%.
  • The company has last paid a dividend of 1510% for FY18 and thereafter it has skipped it. The management is confident of following a prudent policy going forward.

About the issue

Issue open: 17th March- 19th March 2021

Price band: Rs 1,100-1,101 per share

Issue Size: Rs 583 crore (Gross)

Issue Size: The issue comprises an offer for sale of up to 52.94 lakh equity shares, with various stakeholders looking to encash whole or part of their stake in the company. 

Reservation for QIB: 75% , Retail - 10%, Non institutional Investors -15%. The company has reserved 2 crore shares for employees. Employees are eligible for a discount of Rs 110 per share.

Bid lot: 13 shares, and in multiples of 13 shares

INDmoney Recommendation

The company has been reporting losses over the last 18 months, and hence, it has a negative P/E ratio. That said, the company is valued at ~13 times Enterprise Value /Sales based on FY20 data. 

The company has been reporting losses due to high advertising & promotion expenses. This is expected to drive top line growth for the company going forward. Further, the outlook for gaming space in India remains robust, improving the visibility for Nazara Technologies.

Given the company’s market leadership status, strong topline growth, robust outlook, and positive sentiment due to marquee investors, investors who wish to take exposure to an under-penetrated Indian gaming and global gamified early learning market could consider investing in this issue.