Rakesh Jhunjhunwala’s Nazara Tech share price rallies 18% on Q1 net profit; should you buy, sell or hold?

Rakesh Jhunjhunwala’s portfolio stock Nazara Technologies rallied more than 18 per cent to Rs 627 apiece on BSE on Monday,

Nazara Technologies, Rakesh Jhunjhunwala, stock, stock price
So far this year, Nazara Technologies stock has plunged 49 per cent. In comparison, NSE Nifty 50 and the S&P BSE Sensex have lost 2 per cent each

Rakesh Jhunjhunwala’s portfolio stock Nazara Technologies rallied more than 18 per cent to Rs 627 apiece on BSE on Monday, after the company posted a 22 per cent on-year jump in net profit at Rs 16.5 crore in Q1FY23. The stock hit a 52-week low of Rs 484 apiece in June this year, since then Nazara Tech share price has risen nearly 30 per cent. At the end of June 2022 quarter, Rakesh Jhunjhunwala held 10.3 per cent stake or 65.88 lakh shares of Nazara Technologies. Analysts at JM Financial Services have recommended investors to hold the stock. “While FY23 reported growth will be optically high due to acquisitions, we remain circumspect of the company’s medium term growth prospects,” the research firm said.  

In traded volume terms, a total of 3 lakh shares exchanged on the BSE, while 43.41 lakh shares traded on the National Stock Exchange, so far in the day. Despite today’s 18 per cent up move, Nazara Technologies share price is still 62 per cent down from its 52-week high of Rs 1,601 that it had touched on October 11 last year. So far this year, the stock has plunged 49 per cent. In comparison, NSE Nifty 50 and the S&P BSE Sensex have lost 2 per cent each, during the same period. 

Close above 627 can lead to target of 685-690 in coming days

Strong Q1FY23 earnings coupled with a strong uptrend in broader markets have led to Nazara Technologies stock gaining by over 18% intraday, AR Ramachandran, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com. “A positive divergence has also led to this strong uptrend and a close above 627 can lead to a target of 685-690 in the coming days. Support will be at 570,” he added.

Barring eSports, JM Financial finds it difficult to string a coherent growth strategy from Nazara’s diverse, often disparate, assets. “Besides, our conservative view also stems from the company’s limited presence in real money gaming (RMG), the largest revenue pool in India’s online gaming space (see initiation report). While 1Q beat should help reverse recent stock correction, we await more evidence of growth taking roots organically,” analysts at JM Financial added.

Nazara Technologies revenue increased by 70 per cent on-year to Rs 223 crore as against Rs 131 crore in Q1FY22 and a growth of 27 per cent sequentially. EBITDA stood at Rs 30.1 crore in the April-June quarter of the fiscal as the company invested in growth initiatives across its key segments. EBITDA margins stood at 13.5 per cent versus 22.9 per cent for Q1FY22 and 8.5 per cent for Q4FY22, the company’s press release noted.

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