Nazara Shares Slump 8.3% Intraday Post Board’s Nod To Raise INR 900 Cr Via Preferential Shares

Despite the broader market rally, shares of gaming giant Nazara slumped as much as 8.3%, reaching INR 995.85 during the intraday trading on BSE today (September 19), following its board’s approval to raise INR 900 Cr from SBI Mutual Fund and CaratLane founder Mithun Sacheti, and others. 

However, the shares recovered slightly to trade at INR 1028 at 1:05 PM, down 5.6% from the previous close. 

Till 1:05 PM, more than 23.11 Lakh shares of Nazara changed hands till 1:05 PM and the company’s market capitalisation was standing at INR 7,790.03 Cr (around $931.45 Mn).

On year to date basis, Nazara’s stock has given 26.81% return. However, since its listing on the stock exchanges on March 30, 2021, at INR 1,971 per share on the BSE, the stock has seen a 44% decline.

The Sensex peaked as much as 0.98% today after the Federal Reserve cut rates by 50 bps (0.5%) to 4.75-5% for the first time in four years. Historically, emerging markets like India have benefitted from federal rate cuts.

The slump in shares came on the back of the company opting for a stock dilution to gain INR 900 Cr through preferential equity on September 18. 

Pointing out the implications of the recent federal rate cut, Shriram AMC’s senior fund manager Deepak Ramaraju, said, “The US Fed cut the interest rate by 0.5% for the first time in the last 4 years. Such high monetary correction was earlier undertaken only during the global financial crisis, indicating the severity of the economic stress the US is going through. Decadal high inflation and stressed labour market conditions were the preamble for such aggressive monetary correction. 

“On the domestic front, RBI will focus on the data and might likely undertake a rate cut in December or Q4 FY 25. The FII flows can be outbound in the short term and as the US dollar starts easing, the flows can come back into India. The markets are expected to remain in range with positively biased.”

Nazara has been on an acquisition spree in the recent past. Earlier this week, Nazara entered a definitive agreement to acquire a 47.7% stake in Moonshine Technology, the parent company of online poker platform PokerBaazi, for INR 831.5 Cr. 

Last month, it received the letter of intent (LoI) to acquire insolvency-ridden sports entertainment startup Smaaash Entertainment. In the same month, Nazara announced the acquisition of UK-based gaming studio Fusebox Games for INR 228 Cr.

Earlier in July, Nazara, via its subsidiary Nextwave Multimedia, bought casual freemium card game “UTP – Ultimate Teen Patti”.

On the financial front, Nazara managed to improve its bottom line with net profit rising almost 13% to INR 23.6 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25) from INR 20.9 Cr in the previous year’s quarter.

Its operating revenue declined 1.7% year-on-year (YoY) to INR 250.1 Cr during the quarter under review, hurt by degrowth witnessed by two of its verticals – gaming and adtech.

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