Nazara Technologies advances 19% after falling 29% in two days

Shares of the recently listed and ace investor Rakesh Jhunjhunwala-backed Nazara Technologies rallied 19 per cent to Rs 1,738 on the National Stock Exchange (NSE) in intra-day trade on Thursday, after falling 29 per cent in the past two days.

The company had made a stellar debut on the bourses on Tuesday as the shares listed at Rs 1,990, an 81 per cent premium over its issue price of Rs 1,101, on the National Stock Exchange (NSE). However, at the end of the session, the stock was locked in lower circuit of 20 per cent at Rs 1,592, after hitting a high of Rs 2,024.90. It slipped 29 per cent from its high level to hit a low of Rs 1,432 on Wednesday.

The initial public offer (IPO) of Nazara Technologies had received a stellar response from all types of investors, with the issue getting subscribed 175 times. The company is an Indian gaming and sports media platform with a presence in India, North America, Africa and the Middle East.

Its product portfolio includes offerings across interactive gaming, eSports and gamified early learning ecosystems like World Cricket Championship & Carrom Clash in mobile games, Kiddopia in gamified early learning, Nodwin & Sportskeeda in eSports and eSports media, and Halaplay and Qunami in skill-based, fantasy and trivia games.

The company derives revenues mainly from subscription fees paid by users for accessing gamified early learning content, as well as, from eSports business. These two segments cumulatively accounted for 71 per cent and around 42 per cent of operating revenues for April-September 2020 (H1FY21) and FY20, respectively.

For many years, the growth of digital services was inhibited due to prohibitive access to internet, high cost of smartphones and an underpenetrated payment infrastructure. However, all these regions exhibit market commonalities in terms of improving economic outlook and rising digital adoption bolstered by bullish macroeconomic factors such as consistent GDP growth, growing online population, younger median age, and fast growing, affordable smartphone market, Nazara Technologies said in draft red herring prospectus.

With an estimated number of over 326 million mobile gamers (NASSCOM) in the country in 2020, mobile gaming stands out as the most sought-after source of gaming in India with a market size of about USD 1.2 billion. While PC and console games are not as popular as mobile games in the country, there is still significant potential for revenue generation in these gaming segments as witnessed by a market size of about USD 100 million for PC gaming and around USD 240 million for console gaming in India, the company said.

At 02:22 pm, the stock was trading 13 per cent higher at Rs 1,662 on the NSE, as compared to 1.1 per cent risen in the Nifty50 index. A combined 3.2 million equity shares were changing hands on the counter on the NSE and BSE.