Portfolio reset drives IP-led growth for Nazara, says Choice; retains 'Buy'

Analysts at Choice Institutional Equities have reiterated their 'Buy' rating on Nazara Technologies, citing a strengthening of the company’s core growth engine following the de-subsidiarisation of Nodwin and one-off impairments on Freaks4U and PokerBaazi. According to Choice, this reset has created a cleaner portfolio base, positioning Nazara for sustained growth.

 

The company’s renewed brand identity, anchored in deeper interactive entertainment and IP-led experiences, Kunal Bajaj and Rushil Katiyar, analysts at Choice, believe, aligns well with its expanding global footprint and enhances long-term franchise positioning.

 

"With improving UA efficiencies, stronger IP monetisation, and widening reach across mobile and console ecosystems, the earnings profile is becoming progressively cleaner and more predictable," wrote the analysts in their research report.

 

 

Choice has set a sum-of-the-parts (SOTP)-based target price of ₹390 per share, which implies nearly a 52.94 per cent upside from its previous close of ₹255 per share on the NSE.  ALSO READ | Motilal Oswal stays bullish on Indigo Paints, bets on demand recovery

Takeaways from management’s media Interactions

According to Choice, key takeaways from management's recent media interactions indicate that the portfolio reset, highlighted by the de-subsidiarisation of Nodwin and impairments to PokerBaazi and Freaks4U, was designed to improve both earnings quality and visibility. Management also indicated that core gaming would be the anchor for future growth, with structurally higher earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins of 20-25 per cent.

 

The analysts also pointed out that the rebranding of the company under the Enter Magic label underscores its focus on AI-driven, immersive experiences, with ownership of scalable global IPs seen as a key long-term competitive advantage.

 

Further, the brokerage noted that Nazara’s management is actively evaluating larger, IP-led global acquisitions. These would be funded through a mix of accruals, debt, and equity, with "Centres of Excellence" facilitating scalable execution without integration risk. With over 90 per cent of its revenues generated overseas, the company’s growth strategy is centered on compounding through LiveOps intensity, AI-driven efficiencies, and the rollout of new IPs.  ALSO READ | Skipper newly rated 'Buy' at Systematix; 17% upside potential seen

Positioned for a durable growth cycle

With its portfolio clean-up largely completed and execution improving across mobile, PC/console, ad-tech, and offline gaming, Choice believes Nazara is positioned for a more durable growth cycle, underpinned by improving return metrics and enhanced earnings predictability.

 

"We forecast revenue to grow at a 27.9 per cent CAGR over FY25–FY28E, while Ebitda is expected to compound faster at a 48.4 per cent CAGR over the same period, driven by mix improvement, operating leverage, and AI-led productivity gains," said the analysts.

Key risks

However, the brokerage has flagged several risks. “Execution challenges in IP-led M&A, gaming IP volatility, and potential regulatory or platform-policy changes affecting monetisation and capital efficiency,” warned Choice in its report.

 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)