Rakesh Jhunjhunwala Portfolio: Nazara Technologies rose nearly 6 percent to Rs 1,055.40 apiece on BSE on Thursday, after game shares hit a new low of Rs 998.05 in the previous session. The brokerage said the company is a jack of all trades, but being the master of one, aside from eSports, Nazara is not a dominant player in any of the other segments.
Stock price history
The stock rose to a lifetime high of Rs 3,356 each in October last year; however, since then this Jhunjhunwala stock has corrected more than 68 percent. Year-to-date (YTD), Nazara Tech shares are down more than 57 percent in price. Domestic research and brokerage firm JM Financial Services has opened coverage of Nazara Technologies, saying the valuation is “rich.”
JM Financial’s is targeting a potential 4 percent increase on the counter. JM Financial has recommended holding the stock as it believes eSports will continue to drive growth in this gaming stock in the near term, aided by recent acquisitions. eSports is Nazara’s largest (49 percent revenue share, FY22) and fastest-growing segment. Nodwin, Nazara’s eSports subsidiary, has an 80 percent market share in India’s nascent (USD 100 million) but fast-growing eSports market. Nazara’s partnership with global eSports platforms, game publishers and brands positions it as uniquely positioned to lead eSports penetration in India, according to JM Financial.
“Any potential adverse real money gambling (RMG) regulation would not only reduce competition intensity but increase scarcity for Nazara – this would make us more constructive about the company’s prospects and about the stock,” it said.
On the bright side, JM Financial said, Nazara has turned into a diversified gaming company with a presence in eSports, gamified learning, simulation and real money games.
This has given it a foothold in India’s $1.8 billion online gaming market, the brokerage said, and Nazara’s prudent capital allocation strategy has meant that this opportunity has come at a reasonable price.
“In addition, unlike other gaming platforms, we believe Nazara’s disjointed gaming assets limit its ability to broaden its acquisition funnel and maximize gamers’ wallet share,” it said.
Nazara Tech corrects record date
The board of Nazara Technologies has determined June 27, 2022 as the record date for the proposed bonus issuance of shares. The company’s board of directors approved a bonus of one share against each share held by shareholders.
“It is hereby notified that the Board of Directors of the Company has determined Monday, June 27, 2022 as the Record Date to determine the eligibility of shareholders to issue Bonus Shares of the Company in the proportion of one new fully paid-up share of Rs 4 each for each fully paid-up an existing share of Rs 4 each holds,” Nazara Tech informed in an exchange request last week. Bonus shares are fully paid additional shares issued by a company to its existing shareholders.
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