Nazara Technologies - Regulatory Challenges Arise In The Real-Money Gaming Segment: ICICI Securities

ICICI Securities Report

Nazara Technologies Ltd. subsidiaries, OpenPlay and HalaPlay, have received tax demands amounting to ~Rs 11.2 billion. This is in line with similar tax demands received by most companies operating in the resource management group space post the GST Council’s decision to tax the total amount wagered by all the players at the time of buy-in and not on gross gaming revenue.

While the gaming sector remains hopeful that the government will provide some relief with regards to tax demands for the period prior to the GST Council’s clarification, we think there could be some volatility in the stock’s price in the near term given the quantum of the tax demand.

We believe that the contingent liability on Nazara (parent company) is unlikely to be meaningful, given both HalaPlay and OpenPlay are private limited companies.

We maintain 'Buy' and our target price of Rs 1,080.

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