Nazara Technologies Limited

Nazara Technologies Limited was incorporated in India on 8th December, 1999 as a Private Limited Company at mumbai, which is engaged in acquisition of value addition to and distribution, of mobile games across emerging markets such as India, Middle East, Africa, SouthEast Asia and Latin America. Company's operations comprise of company's Subscription Business, Freemium Business and esports business. Company's Subscription Business is focussed on mass mobile internet users in the emerging markets, comprising largely of first time mobile gamers. In light of the low propensity of gamers to pay for online content in many of company's markets, Company has tailored its product offerings to deliver maximum value for gamers at affordable price points. The“sachet pricing” strategy in company's Subscription Business allows gamers to access company's entire catalogue of over 1,021 android games, upon signing up for a daily, weekly or monthly subscription. Billing for company's Subscription Business is channelled through telecom operators (carrier billing), which has eased the payment process for gamers and collection of revenue by company. As on December 31, 2020, The company was offering company's Subscription Business services through 52 telecom operators in 58 countries, including but not limited to Airtel, Vodafone and Idea in India; and Etisalat and Ooredo in the Middle East. Company's localised gamer insights are reflected in the popularity of some of company's mobile games on the Google Play Store, such as, ‘World Cricket Championship 2’, ‘Chhota Bheem Race’, and ‘Motu Patlu Game’. Company's games have consistently been part of the top three games on the top free charts on the GooglePlay Store ahead of certain globally established names such as Candy Crush, Subway Surfer and Temple Run. As per financial performance, Nazara has posted total income/net profits of Rs. 181.94 cr. / Rs. (2.58) cr. (FY18), Rs. 186.09 cr. / Rs. 18 cr. (FY19) and  Rs. 207.00 cr. / Rs. 213.58 cr. in FY20. For upto Q3 of FY21, it has reported net loss of Rs. (14.35) cr. on total revenue of Rs. 207.00 cr. So company has posted consistent growth over last couple of years. Nazara has posted an average EPS of Rs. 1.92 and average RoNW of 1.30% for last three fiscals. Issue is priced at a P/BV of 6.54 as per NAV of 168.47 on 30.09.20. As per FY20 , earnings are negative so we can not calculate P/E. So issue looks very aggressively priced. As per RHP, there is no listed peers. On BRLM's front, four BRLMs are associated with this IPO, and have handled around 27 IPO in last three fiscals. From last 10 IPOs, 3 are opened below issue price and remaining are opened above issue on the day of listing. As of now, all are trading above issue price. ( As on 25.02.2021) As per financials, results of Nazara are average, RoNW is 1.30% for last three fiscals and company has posted losses since FY20. Mobile gaming sector is highly growing and expected to grow at good rate, but level of competition is also very tough. One of the investor in company is Rakesh Jhunjhunwala and due to that, there is lot of buzz for this IPO. Performance of BRLM is good, So we give SUBSCRIBE rating to this IPO for listing gains only.

• 1 Vikash Mittersain
• 2 Nitish Mittersain
• 3 Mitter Infotech LLP