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Nazara Technologies shares spike 20% as stock trades ex-bonus

The record date for the bonus issue has been fixed as June 27, which means a person having a share of Nazara Technologies by closing of June 27 is eligible to get a bonus share.

June 24, 2022 / 03:26 PM IST
 
 
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Shares of online gaming company Nazara Technologies surged 20 percent intraday on June 24 after the stock adjusted for the bonus issue.

The stock was trading at Rs 614.25, up 17.92 percent against the previous close of Rs 520.90, at the time of writing this report.

On May 13, Nazara announced the bonus issue in the ratio of one equity share for one equity share held by shareholders as on record date. Hence, the previous closing price of the stock halved to Rs 520.90, against Rs 1,041.80 earlier.

The record date for the bonus issue has been fixed as June 27, which means a person having a share of Nazara Technologies by the closing of June 27 is eligible to get a bonus share.

After hitting the lowest point since listing, the stock has rebounded. Its lowest closing was Rs 500.38 on June 22 while it touched the high of Rs 1,601.13 on October 11 last year. This means Nazara lost 69 percent in more than eight months of journey, which could be due to the market trend.

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After the management meet, Prabhudas Lilladher retained its buy call on Nazara Technologies as the brokerage has increased its earnings per share (EPS) estimates by 2-3 percent and expects sales and PAT CAGR of 35 percent and 54 percent, respectively over FY22-24.

Though growth challenge in Kiddopia persists, Esports is likely to emerge as a key growth lever as TV broadcasting during prime time will help increase viewership and popularity multi-fold in the future, the brokerage added.

After hosting a meeting with Manish Agarwal, CEO of Nazara Technologies, Prabhudas Lilladher said the 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 during prime time for 2-3 hours is likely to be profitable from the first year itself.

The management highlighted that the production cost of the event would range between Rs 15-20 crore. TV broadcasting will not only increase the popularity of ESports but also boost the media rights licensing revenue of Nazara, the brokerage added.

Nodwin Gaming, a subsidiary of Nazara, has tied up with Star Sports to live telecast BGMI Master Series for the first time on Indian TV.

ESports tournaments are typically broadcast on OTT platforms. For instance, Nazara has tied up with HotStar, Viacom, and YouTube to broadcast ESports events. However, this is the first time that an event will be live telecast on linear TV in partnership with Star Sports.

With respect to off-line events in ESports, incremental revenue addition is expected to be Rs 60-70 crore (more or less in-line with the guidance given earlier) in FY23, analysts at Prabhudas Lilladher feel.

However, for Kiddopia, "while $400K was earmarked to be spent on YouTube, Nazara expended just $100K and since LTV/CAC went beyond guard rate, incremental spends have been curtailed. Even the brand building exercise (sum ear-marked was $300-400K per month) has not yielded desired results and hence fresh spends have been paused," said the brokerage.

Disclaimer: The views and investment tips expressed by investment 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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first published: Jun 24, 2022 03:26 pm
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