Started in 1999, Nazara Technologies Limited is one of the leading mobile games companies headquartered in Mumbai, which is engaged in acquisition of, value addition to and distribution, of mobile games across emerging markets such as India, Middle East, Africa, South East Asia and Latin America. Company's operations comprise of their Subscription Business, Freemium Business and eSports business. Company's subscription services were accessed by 130.43 million monthly visitors from 61 countries across emerging markets, and over 4.08 million paying users subscribed to their subscription services, and downloaded over 37.62 million games, in September 2017. As a part of their in-house Freemium Business, they had 44.49 million downloads until September, 2017 in calendar year 2017 and 19.34 million downloads in calendar year 2016. Their recently acquired Subsidiary, Next Wave had 64.30 million downloads in calendar year 2017, until September 2017 and 42.02 million downloads in calendar year 2016. Company's in-house monthly active users (MAUs) in September 2017, were 8.66 million as compared to 2.79 million MAUs in September 2016, across their network of games on the Google Play Store and App Store. Next Wave's MAUs in September 2017 were 11.02 million as compared to 5.98 million MAUs in September 2016, across its World Cricket Championship franchise. Further, their recently acquired Subsidiary, Nodwin Gaming is a pioneer in esports in India with established relationships with global gaming publishers and platforms including market leaders such as ESL, the biggest esports organiser in the world and Valve Corporation. Company has tailored its product offerings to deliver maximum value for gamers at affordable price points. The 'sachet pricing' strategy in their Subscription Business allows gamers to access their entire catalogue of over 1,000 android games, upon signing up for a daily, weekly or monthly subscription. Billing for the Subscription Business is channelled through telecom operators (carrier billing), which has eased the payment process for gamers and collection of revenue by them. As on September 30, 2017, company was offering the Subscription Business services through 113 telecom operators in 61 countries, including but not limited to Airtel, Vodafone and Idea in India; and Etisalat and Ooredo in the Middle East. As part of our in-house Freemium Business, company's localised gamer insights are reflected in the popularity of some of their mobile games on the Google Play Store, such as, 'World Cricket Championship 2', 'Chhota Bheem Race', and 'Motu Patlu Game'. Their games have consistently been part of the top three games on the top free charts on the Google Play Store ahead of certain globally established names such as Candy Crush, Subway Surfer and Temple Run. For FY17, and in the six month ended September 30, 2017, Freemium Business had revenue from advertising services of Rs 39.83 million and Rs 31.23 million, respectively. Further, the recently acquired Subsidiary, Next Wave registered a total income of Rs 87.11 million and Rs 49.90 million in FY 2017 and in the six month ended September 30, 2017, respectively, on a consolidated basis. A subsidiary of company, Nodwin Gaming in addition to hosting and managing IP based gaming events such as, the ESL India Premiership and Dew Arena by ESL, Nodwin Gaming also partners with other brands to create multiple gaming events intellectual properties in India, such as Mountain Dew Arena, Indian Gaming Show and Asus ROG Masters. Further, Nodwin Gaming contributed 53.37% or over '10.00 million of the cumulative Indian prize pool for eSports, in calendar year 2017. For FY17, and in the six month ended September 30, 2017, Nodwin Gaming had a total income of Rs 90.41 million and Rs 104.78 million, respectively, on a consolidated basis. As on December 31, 2017, company had 213 employees for its Indian and overseas operations. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
✍️ Post a Comment