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Indian gaming stocks zoom on Microsoft-Activision deal but analysts are not excited, here's why

The share price of Nazara Technologies hit its 5 percent upper circuit limit of Rs 2,494.25 on the NSE, while that of OnMobile Global soared 15.5 percent to Rs 148.85

Mumbai / January 19, 2022 / 02:25 PM IST
 
 
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The share prices of online gaming companies skyrocketed in India on January 19 in line with their peers abroad a day after tech giant Microsoft said it was acquiring "Candy Crush"-maker Activision Blizzard in a record-breaking deal.

Shares of ace investor Rakesh Jhunjhunwal-backed Nazara Technologies hit their 5 percent upper circuit limit of Rs 2,494.25 on the NSE, while those of OnMobile Global soared 15.5 percent to Rs 148.85.

Analysts, however, don’t see the rally lasting.

“I don’t think it (Microsoft-Activision) deal matters for Indian listed companies at all because they don’t make games,” said an analyst with a foreign brokerage firm on condition of anonymity as he was not authorised to speak to media.

On January 18, Microsoft said it was buying video-game publisher Activision Blizzard in a $69 billion all-cash deal, the biggest in technology sector that eclipses Dell’s purchase of EMC for $67 billion in 2016.

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The deal, which took investors by surprise, shows that technology giants are making moves to secure their space in the metaverse that has become the buzzword ever since Facebook changed name to Meta to align with its future strategy.

Metaverse is a virtual world where people can work, play and socialise in digital avatars.

Also read: Microsoft's Activision purchase bolsters metaverse efforts against Zuckerberg's Meta

Analysts said the deal was beneficial in terms of re-rating potential for companies that create gaming intellectual property.

“Microsoft is acquiring Activision because there is this whole concept of the metaverse and every cloud-provider wants to enter that to do that they need to have strong virtual environment and games have the strongest virtual environment,” the analyst said.

Industry watchers were of the view that a company like Microsoft will never acquire a mobile gaming platform like Nodwin or Kiddopia, therefore, the deal as such has no implication for companies such as Nazara Technologies, who are platform providers for game publishers.

That said, the surge in shares of Nazara Tech and OnMobile Global is explained by the fact that investors often value them on the basis of the valuation of their global peers.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Chiranjivi Chakraborty
first published: Jan 19, 2022 02:25 pm
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