Nazara Technologies Surges As Google Play To Run Pilot Of Real-Money Games
The move is a marked shift in Google’s stance towards fantasy gaming apps in India.
Shares of Nazara Technologies Ltd. surged for the third straight day after Google Play said it will run a year-long pilot programme of daily fantasy sports and rummy apps for users in India.
The pilot is meant for developers incorporated in India to build apps for users in India only, and will run from Sept. 28, 2022, through Sept. 28, 2023, according to the search engine’s blog.
Nitish Mittersain, joint managing director at Nazara Technologies, said skill-based real-money gaming business has grown quite a bit in the last few years. "It has largely operated in a unclear, unregulated environment. Players like ourselves have found it difficult to make large investments in the space, without clarity on taxation. Therefore we've been asking for clarity for a long time, so we can double down on this opportunity."
Mittersain said he's hopeful since Google, which hadn't allowed such apps, is changing its stance. "We're hopeful they've also got more details that the landscape in India is becoming clearer. It's a positive step."
From a business perspective, he said the move that allows such apps to be available on Google Play will drive down the cost of user acquisition significantly and apps can then gain from organic discovery.
Nazara's acquisition-led growth has seen it add Hyderabad-based skill gaming company OpenPlay, which operates ClassicRummy, and Halaplay that offers fantasy cricket, football, and kabaddi.
As of the quarter ended June 30, revenues from these sources make up only 6% of Nazara's total topline. "Right now, real money gaming is only 6% of our revenues. We're waiting for clarity on GST slabs, how real money gaming will be taxed," said Mittersain.
Shares of Nazara Technologies gained as much as 7.2%, before closing 4.7% higher on Monday. The stock is now on a three-day winning streak.
Trading volume is nearly five times the 30-day average. The relative strength index is 75, suggesting the stock may be overbought.
Of the 11 analysts tracking the company, nine maintain 'buy', one suggests 'hold' and one recommends 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 5.2%.