Buy Nazara Technologies; target of Rs 1182 Prabhudas Lilladher

Prabhudas Lilladher is bullish on Nazara Technologies has recommended buy rating on the stock with a target price of Rs 1182 in its research report dated November 18, 2024.

Broker Research

November 19, 2024 / 12:24 IST

Buy

live

bselive
nselive

Volume

Todays L/H

Prabhudas Lilladher's research report on Nazara Technologies

Nazara reported muted operational performance with EBITDA margin of 7.9% (PLe 9.9%) led by higher-than-expected employee cost of Rs676mn (PLe Rs539mn) amid consolidation of project-intensive business of Freaks 4U and margin deterioration within FuseBox. Since the last 3-4 quarters, Nazara’s topline growth has been under pressure due to challenges in Ad-Tech (loss of a large client), Kiddopia (subscriber loss since last 6 quarters), and Real Money Gaming (GST levy of 28% on full bet value). However, we expect headwinds to subside with top-line CAGR of 19.6% over the next 2 years given 1) acquisition of Space & Time, a UK based growth-marketing agency, 2) efforts to close IP partnerships in Kiddopia and 3) consolidation of FuseBox and Freaks 4U. Further, we expect EBITDA margins to improve from 13.7% in FY25E to 15.7% in FY27E considering the measured approach on new user spends and better margin profile of the newly acquired entities.

Outlook

Nazara trades at EV/sales multiple of 4.7x/3.7x/3.2x on our FY25E/FY26E/FY27E estimates, unadjusted for minority. We maintain our BUY rating on the stock with an SoTP-based TP of Rs1,182 (refer Exhibit 6 for more details).

For all recommendations report, click here