Nazara Technologies - Nodwin Expands Into Developed Markets: Prabhudas Lilladher

Prabhudas Lilladher Report

We increase our Ebitda estimates by 4.5%/6.0% for FY25E/FY26E taking into consideration the acquisition of Freaks and Downgrade Nazara Technologies Ltd. to Hold with a revised target price of Rs 878 (earlier Rs 806) amid 31% appreciation in stock price since our last update.

We believe the acquisition not only paves the way for Nodwin to access developed markets where Esports has better penetration, but also lends expertise in PC-based games.

The buyout has also re-ignited growth prospects of the Esports segment, which has been facing some challenges off late due to deferment in media rights deals.

Post consolidation, we expect revenue/Ebitda compound annual growth rate of 23.7%/45.1% over FY24-FY26E. Given sharp appreciation in stock price we believe rerating from hereon will hinge on capital allocation decisions, as Nazara has a cash balance of Rs 14.5 billion.

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