The initial public offering (IPO) of ace investor Rakesh Jhunjhunwala-backed Nazara Technologies continues to see a strong response, as the public issue was subscribed 10.55 times by the morning of March 18, the second day of bidding. The IPO closes for subscription on March 19.
The issue has received bids for 3.08 crore equity shares against an offer size of 29.20 lakh equity shares, the subscription data on exchanges showed.
Non-institutional investors have put in bids 7.73 times more than their reserved portion, while the portion set aside for retail investors has seen a massive 44.47 times subscription and that of employees is subscribed 5.33 times.
The company has reserved 20,181 equity shares for its employees valued at nearly Rs 2 crore at a discounted price of Rs 991 per share. The company may offer shares to employees at a discount of Rs 110 per share.
The qualified institutional buyers have subscribed for 72 percent of their reserved portion so far.
Nazara Technologies, an India-based gaming and sports media platform, is planning to garner around Rs 583 crore through the issue, which is a complete offer for sale. The price band for the offer has been fixed at Rs 1,100-1,101 per share.
Also read the Moneycontrol's exclusive analysis report on Nazara Technologies IPO
It raised Rs 261.31 crore from anchor investors on March 16 at higher price band, which indicated that the final issue price could be Rs 1,101 per share.
"Considering its leading position in the mobile gaming industry in India with a presence across emerging and developing countries and ongoing positive sentiments for new IPO's in current scenario, we assign 'subscribe' rating to this IPO issue," said Ashika Stock Broking.
The issue is valued at 5.5x FY21 P/BV and 7.6x FY21 EV/sales on an annualised and post-issue basis, while the issue is first of
its kind listing and has no peer comparison in India, the brokerage said.
The management has highlighted gaming industry to see exponential growth globally led by increasing penetration of phones, cheap and fast internet and tech savvy nature of new generation. India is best placed to benefit from all these themes. The company is expanding gamified learning offering in different regions and eSports to be a big disruptor, the brokerage added.
Also read - Analysts give a thumbs up to Nazara Technologies IPO
Over FY18-20, Nazara's revenue grew at a 20 percent CAGR, while in nine months period ended December 2020 it achieved around 81 percent of FY20 revenue.
However, EBITDA went to negative in FY20, as the company reduced its dependence on high-margin telco subscription segment to 21 percent of revenue (89 percent in FY18) to diversify and expand in fast-emerging segments.
Nazara is well diversified with some of the most recognisable IPs in its kitty. Kiddopia, which is a gamified early learning, contributes 39 percent to revenue, Nodwin & Sportskeeda in eSports (32 percent), WCC & CarromClash in simulation games (5 percent), and Halaplay Technologies in real money games (3 percent), while Telco Subscription forms 21 percent of revenue.