SUMMARY
Nazara is the sixth largest stock bet in terms of valuation
Rakesh Jhunjhunwala’s 11% stake in company is not valued at INR 656 Cr
The company’s IPO was subscribed over 175X, with bits for 1.17 Cr equity shares on Day 1
Mumbai-based online gaming company Nazara Technologies made a strong debut on the stock exchange today (March 30) as its shares jumped to INR 1,918 on the National Stock Exchange (NSE) versus the issue price of INR 1,101, representing a 80.74% premium. On the Bombay Stock Exchange (BSE), the company got listed at INR 1,971, translating into a 79.02% premium.
With this, Nazara Technologies has become the first gaming startup to be publicly listed in India and the sixth largest stock bet in terms of valuation. The company, founded by Vikash Mittersain and Nitish Mittersain in 2000, counts Indian investor and trader Rakesh Jhunjhunwala as an early backer. Jhunjhunwala had invested INR 180 Cr in Nazara back in 2008 and owns about 10.82% stake in it. His stake is now valued at INR 656 Cr.
The company’s initial public offer (IPO) had opened on March 17 to March 19. It had witnessed 2X subscriptions with bids of 59,52,778 shares, as against the issue size of 29,20,997 shares, till 1 PM on the first day of listing. The IPO was subscribed 4.01X on the first day, with bids for 1.17 Cr equity shares.
Across the three days, Nazara Shares were subscribed over 175 times. The portion reserved for qualified institutional buffers (QIB) was subscribed 104X and that for retail investors was subscribed 75X. High networth individuals (HNI) lapped up the issue, bidding for 390X their quota. Jhunjhunwala had not participated in the bid.
Nazara Looks To Clock In INR 470 Cr In Revenue In FY2021
Nazara is a diversified gaming and sports media platform with a presence in India and global markets such as Africa and North America. The company specialises in interactive gaming, e-sports and gamified early-learning ecosystem, and is well-known for its variety of products, including World Cricket Championship (WCC) and CarromClash (mobile games), Kiddopia (gamified early learning), Nodwin and Sportskeeda (e-sports and esports media, respectively) and Halaplay and Qunami (skill-based fantasy and trivia games).
According to the company’s draft red herring prospectus (DRHP), an offer document for public listing, Nazara has about 40.17 Mn (4 Cr) monthly active users for the financial year 2020 and an average of 49.25 (4.9 Cr) monthly active users across all games for the six-month period till September 30, 2020.
The company has posted revenue of INR 264 Cr in the financial year 2020, growing from INR 164 Cr in FY2019. It aims to clock a revenue of INR 450 Cr-INR 470 Cr in FY2021, ending in March, by expanding its coverage and building up distribution network capacity in emerging markets.
Nazara’s annual report 2019-2020 adds that its other businesses such as telco subscriptions, esports and freemium accounted for a 23.86% EBITDA (Earnings Before Depreciation, Interest, Taxes and Amortization) margin compared to a 14.37% EBITDA margin in FY19.
The new acquisitions of real-money gaming firms, Halaplay and Big Paisa, and early-learning company Paper Boat App brought INR 617.32 Mn in revenue, while the company incurred a loss of INR 381.87 Mn on account of upfront investments in new player acquisition and brand building. The investment in new acquisitions saw an overall EBITDA margin of 3.74% in FY20 compared to 14.37% in FY19.
Some of the startups acquired by the company in the past decade include MyGamma, Djuzz, NODWIN Gaming, Sportskeeda, SportsUnity and Halapay Technologies. Nazara has been eyeing an IPO since 2017, but had to delay it for various reasons.
