Nazara Technologies - Management Meet Update - Breaking through the ESports landscape - BUY

Mr. Jinesh Joshi - Research Analyst at Prabhudas Lilladher Pvt. Ltd.

We hosted Mr Manish Agarwal, CEO of Nazara Technologies for a NDR recently. Management indicated that Battle Grounds Mobile India (BGMI) Master Series IP which is to be telecast on Star Sports from June-24 to July-17 is likely to be profitable from first year itself. With respect to off-line events in ESports, incremental revenue addition is expected to be Rs600-700mn (more or less in-line with the guidance given earlier) in FY23E. However, for Kiddopia while US$400K was earmarked to be spent on YouTube, Nazara expended just US$100K and since LTV/CAC went beyond guard rate, incremental spends have been curtailed. Even the brand building exercise (sum ear-marked was US$300-400K per month) has not yielded desired results and hence fresh spends have been paused.

Overall, we have increased our EPS estimates by 2-3% and expect sales/PAT CAGR of 35%/54% respectively over FY22-24E. Though growth challenge in Kiddopia persists, Esports is likely to emerge as key growth lever as TV broadcasting during prime time will help increase viewership and popularity multi-fold in future. Retain BUY with a DCF based TP of Rs1,813 (earlier Rs1,747).

Shares of Nazara Technologies Limited was last trading in BSE at Rs. 1045.00 as compared to the previous close of Rs. 998.05. The total number of shares traded during the day was 10884 in over 1323 trades.

The stock hit an intraday high of Rs. 1055.40 and intraday low of 1005.85. The net turnover during the day was Rs. 11252380.00.

Source : Equity Bulls

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