Rakesh Jhunjhunwala-backed gaming firm Nazara Technologies Ltd raised Rs 100 crore in funding from Instant Growth Ltd (IGL), weeks after the company filed preliminary papers with Sebi to float an IPO
Rakesh Jhunjhunwala-backed gaming firm Nazara Technologies Ltd raised Rs 100 crore in funding from Instant Growth Ltd (IGL), weeks after the company filed preliminary papers with capital markets regulator Sebi to float an initial public offering (IPO). The firm is popularly known for its games on the World Cricket Championship, Chhota Bheem and Motu Patlu series. According to PTI, Nazara will invest the proceeds in forging alliances and acquisitions to further bolster its position in the gaming ecosystem as well as strengthening its gamified learning offerings. Ranjit Jha, CEO, Rurash Financial Pvt Ltd told Financial Express Online that the stock has been trading around Rs 1,060 apiece in the unofficial market for unlisted shares.
First gaming firm to be listed
For the six months ended September 30, 2020, Nazara Technologies reported a profit of Rs 10.1 crore, while in the financial year 2020, it posted a profit of Rs 26.6 crore. Jha added that Nazara Technologies will be first of its kind to get listed on the Indian stock market. This may create excitement among the stock market participants. “This gaming company is currently into losses, due to its aggressive acquisition strategy till date which has although resulted into diversification into the gaming space,” Jha said.
According to draft red herring prospectus (DRHP), Nazara Technologies’ issue will see a sale of 49.65 lakh equity shares by the promoters and existing shareholders. The equity shares are proposed to be listed on BSE and NSE. ICICI Securities, Nomura Financial Advisory and Securities (India) Private Limited, Jefferies India Private Limited and IIFL Securities are book running lead managers to the issue.
Abhay Doshi, Founder, UnlistedArena.com — dealing in Pre-IPO & Unlisted Shares — told Financial Express Online that the stock has given over 100 per cent returns to unlisted shares’ investors in less than a year even before its IPO. The tech-startups are the flavour of the decade in India as well as in global markets. “Companies with next-gen business models are getting prime valuations. The presence of marquee investors in Nazara adds to the fancy,” Doshi said. In the last couple of years, the company has made significant investment in the gaming ecosystem which is considered as one of the most exciting spaces over the next decade.
What to expect from Nazara Technologies IPO
The mobile gaming industry is a huge market in India with strong growth rates possible due to the high smartphone penetration and lower internet costs, says AR Ramachandran, Co-founder & Trainer, Tips2Trade. “With the current positive sentiment and IPO frenzy, Nazara Technologies could be a good short term bet for investors for listing gains,” Ramachandran told Financial Express Online.
Ranjit Jha sees a turnaround story in Nazara Technologies. The company is poised to do well in the mid to long term. Also, there is a possibility of buyout of the company by a global tech based gaming company. “So, the Indian investors can expect good returns from Nazara Technologies in the coming years, with a minimum return of 15 per cent from the expected issue price (Rs 1050- 1070),” Jha said.
Nazara owns IPs, including 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 stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)