Nazara Technologies - Creating A Margin-Accretive Global Delivery Platform: ICICI Securities

ICICI Securities Report

We maintain our Buy rating on Nazara Technologies Ltd. with a target price of Rs 1,080. Our target multiple stands at 37 times FY26E enterprise value/Ebitda (excluding-minority).

Key risks:

1. Increased competition/slowdown in U.S. markets; and

2. inability to identify and integrate acquisitions in manner that creates value for minority shareholders.

On July 03, 2024, we hosted Nodwin’s management for an interaction with investors. Nodwin has increased its stake in Freaks 4U gaming, from 13.51% to 57%. They plan to eventually acquire 100% of the company through a share swap deal.

According to management, Freaks 4U gaming’s strength in the PC gaming market is complementary to Nodwin’s capability in mobile gaming; and Nodwin’s frugal execution should help them turn profitable by FY25E.

Management outlined their vision of increasing ‘timeshare of mindshare’ of gamers by expanding their ‘house of brands’ approach towards gaming IPs and highlighted that acquisitions are necessary when ‘buy’ is more economical than ‘build’.

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