Shares of Nazara Technologies rose as much as 6.4% to INR 707.25 on the BSE in the intraday session on Monday
Nazara reported a 31% year-on-year rise in its consolidated profit after tax (PAT) in Q1 FY24 at INR 20.9 Cr
In a statement after its Q1 results, Nazara CEO reiterated that the GST Council’s decision to levy 28% GST on real-money gaming is expected to have minimal impact on the company
Shares of Nazara Technologies surged over 6% in the intraday session on the BSE on Monday (July 31), buoyed by the company’s performance in the quarter ended June 2023.
On Friday, the gaming company reported a 31% year-on-year (YoY) rise in its consolidated net profit to INR 20.9 Cr in the first quarter of FY24. It had reported a profit of INR 15.9 Cr in the year-ago quarter.
The company’s shares rose as much as 6.4% to INR 707.25 on the BSE in the intraday session on Monday. The shares were trading 4.7% higher at INR 696 at 2:55 PM.
It must be noted that shares of Nazara were on an uptrend since March this year. However, the GST Council’s decision to levy 28% GST on real-money gaming hit the stock hard. Despite Nazara saying it impacted the GST Council’s decision to have minimal impact on its revenue, the stock seemed to have lost steam. However, the company’s Q1 results seem to have turned investor sentiment negative.
Nazara’s Q1 profit grew 75% quarter-on-quarter (QoQ) from INR 11.89 Cr. Revenue from operations rose 14% to INR 254.4 Cr from INR 223.1 Cr in the year-ago quarter. The gaming vertical accounted for INR 109.5 Cr revenue in Q1 FY24.
The company also said it expects its revenue and EBITDA to accelerate in coming quarters due to seasonality and its decision to defer key esports launches to benefit from upcoming opportunities.
Nazara founder, CEO and joint MD Nitish Mittersain reiterated that the decision to impose 28% GST on real-money games would have minimal impact on the company as skill-based real-money gaming just accounted for 4.7% of Nazara’s revenue and 0.5% of EBITDA in Q1 FY24.
It must be noted that Mittersain, while speaking at Inc42’s The Maker Summit earlier this year, attributed Nazara’s conservative approach to the real-money gaming segment to the lack of clarity on regulations and taxation.