The online gaming company has already emerged as a long-term wealth creator in the market for unlisted shares, having delivered 70 times return in last 15 years.
The scrip has also turned a multibagger in last nine months and now trades at Rs 1,400-1,450 in the unlisted market, up 350 per cent from Rs 400-425 in June 2020.
Nazara Technologies is an India-based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America, with offerings across the interactive gaming, eSports and gamified early learning ecosystems.
Big Bull Rakesh Jhunjhunwala owned nearly 20 per cent stake in the company as of last March.
The market buzz is that the company is likely to float its primary offering by March 19-23 and the issue is likely to be priced ar around Rs 1,100-1,200 apiece. ETMarkets.com could not independently confirm the same with the promoters.
Elara Capital in a report said the IPO-bound gaming company looks like a compelling play in the digital space due to its end-to-end offerings from eSports to casual & fantasy gaming. It said Nazara should command a premium valuation on enterprise value (EV)/sales.
“Nazara may trade at an even higher multiple vs expectations, as it is a pure-play digital company offering the potential of 30% revenue growth CAGR as per its own estimates. Global gaming and eSports companies are trading at 3.3x one-year forward EV/sales despite much lower growth rates than those in India,” the report said.
Sandip Ginodia, CEO, Altius Investech, said: “The scrip is aggressively traded in the unlisted market and is fully priced in. The digital theme playing in the market and solid growth estimates are adding to the fancy for the company.”
WestBridge Ventures II Investment Holdings, a fund managed by WestBridge Capital, sold its 21.86 per cent stake of Nazara Technologies to Plutus Wealth Management for Rs 500 crore.
In 2005, WestBridge had acquired over two-third stake in Nazara. It sold over 45 per cent stake to IIFL Special Opportunities Fund and Rakesh Jhunjhunwala at the end of 2017. IIFL Special Opportunities Fund and Jhunwalala held 11.76 per cent and 19.68 per cent stake in the company on a post equity dilution basis as of March 31, 2020.
WestBridge Ventures had invested Rs 22.6 crore in Nazara Technologies in 2005. It obtained consideration of over Rs 1,000 crore from this investment during this period.
Nazara has invested over Rs 300 crore in the gaming ecosystem over the past five years. It has products like WCC and CarromClash in mobile games, Kiddopia in gamified early learning, NODWIN and Sportskeeda in esports and esports media, and Halaplay and Qunami in skill-based, fantasy and trivia games.
The company’s consolidated revenue for financial year 2019 stood at Rs 183 crore, on which it generated Rs 4.2 crore PAT. For the year 2018, these figures stood at Rs 180 crore and Rs 1.2 crore, respectively.
Sunil Chandak of Mumbai-based Gennext Investrade said: “The stock has been a hot property of late. The company has a lot of potential. Whopping fund raising by gaming companies like Roblox may pump up the valuations.”