Nazara - Strong Cash Position Could Help Unlock Value Amid Low Investor Confidence In RMG: ICICI Securities

ICICI Securities Report

Nazara Technologies Ltd. has a cash balance of more than Rs 8 billion (standalone) post the preferential allotment of around Rs 5.1 billion.

We believe this puts Nazara in a strong position to capitalise on the funding freeze in real-money gaming space.

Most platforms are not fully passing on the 28% GST rate to end user due to the fear of losing share to competition, which is intensifying their cash crunch. Our channel checks suggest most funding opportunities in the space are (more than 60-70%) down rounds.

Given the steep correction in valuation and the belief that regulators could revise taxation in H1 CY24, consolidation is getting delayed.

However, we note there has been some correction in salaries and some conversations have begun regarding the potential buy-outs. This could benefit Nazara as it tries to buy/build a play in RMG space.

Maintain 'Buy'.

Key risks:

• Impact due to increased competition/ slowdown in U.S. markets, and

• inability to identify and integrate acquisitions.

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