Hold Nazara Technologies; target of Rs 1345: Prabhudas Lilladher

Prabhudas Lilladher's research report on Nazara Technologies

We cut our EPS estimates by 32%/15% for FY26E/FY27E amid widening losses in Nodwin and PokerBaazi. In 1QFY26, Nodwin/PokerBaazi reported an EBITDA loss of Rs110mn/Rs739mn respectively. NAZARA IN reported an in-line performance with revenues of Rs4,988mn (PLe Rs4,872mn) and EBITDA margin of 9.5% (PLe 10.0%) while PAT was aided by revaluation gain of ~Rs660mn in an investee company, STAN. NAZARA IN’s plans to cede control in Nodwin by not participating in the fund raise reflects renewed focus on profitability over scale. Even the latest acquisition of Curve Games (EBITDA margin of 38.0% in 1QFY26) and FuseBox (EBITDA margin of 14.3% in 1QFY26) reflects a pivot towards expanding within the high margin core gaming segment.

Outlook

We incorporate acquisition of SMAASH into our estimates and expect sales CAGR of 9% over next 2 years with an EBITDA margin of 14.5%/16.4% in FY26E/FY27E. Retain HOLD with a SoTP based TP of Rs1,345 (refer exhibit 6 for more details).