- Rakesh Jhunjhunwala backed gaming stock Nazara Technologies Limited bled 45% in 4 months.
- Ace investor Rakesh Jhunjhunwala held a 10.1% stake in the company as of December 31 and as per sources, he reduced his stake recently.
- Currently, the stock is trading at 8.83 times its book value, but its already low promoters holdings have decreased by 1.38% in the last quarter.
Rakesh Jhunjhunwala backed gaming stock Nazara Technologies Limited bled 45% in 4 months. It had reached a high of ₹3,356 apiece in October 2021 after its listing in March last year. Currently, it is trading at ₹1,857.80 per share, down by 44.64%.
Ace investor Rakesh Jhunjhunwala held a 10.1% stake in the company as of December 31 and as per sources, he reduced his stake recently.
In October last year when the company announced that it will raise ₹315 crores from marquee investors, the stock hit a lifetime high and Rakesh Jhunjhunwala’s net worth grew by ₹265 crores during this period.
“Nazara’s stock price has seen pressures from both macro factors like selloff in tech and micro factors like stagnating growth in existing verticals. However, we believe this is one of the better names in the tech space. The disruption shall be transitory. The stock price reflects excessive pessimism. We believe that the same shall turn around with sustained execution,” said B&K Securities, a brokerage firm. Further, it suggested a target of ₹3,241 on the stock.
B&K Securities said that Nazara is a good player in Indian Tech with reasonable valuations, multiple verticals and profitability with market leadership.
Prabhudas Lilladher said it has cut its sales forecast as the focus is on the scale and not profit maximisation, given the hypergrowth nature of the gaming industry. It has cut estimates by 9 per cent for FY23 and 13 per cent for FY24 as a change in Apple’s privacy policy has stunted growth in Kiddopia — a net addition of a mere 3,000 in the last 2 quarters — making subscriber acquisition a challenging task in the near term.
This brokerage firm has a target of ₹2,544 on the tech company.
Currently, the stock is trading at 8.83 times its book value, but its already low promoters holdings have decreased by 1.38% in the last quarter. It gave a low return on equity for the last three years, at 1.71%. On the bright side, the company is almost debt-free, grew 35% year on year 42% QoQ in revenues. It delivered ₹446.6 crores of revenue in the first nine months since its listing.
“The company witnessed 75 per cent year-on-year growth in the e-sports segment for nine months of FY22, led by strong growth in revenue across all sub-segments in Nodwin and SportsKeeda,” Manish Agarwal, Group CEO at Nazara Technologies, said.
Nazara Technologies Limited is a leading India based gaming and sports media platform with a presence in India, Africa, North America and many other emerging and developed global markets. Given the prevailing conditions in Russia and Ukraine and other economic and geopolitical factors, along with what analysts have to say, it is safe to consider that Rakesh Jhunjhunwala’s stock bet did not go wrong.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Trade Brains. Contact your financial advisor before making any investment decisions.
