Rakesh Jhunjhunwala-Backed Nazara Technologies Jump 20% On Q1 Profit Growth
Here's what brokerages made of Nazara Technologies' Q1 FY23 results.
Shares of Nazara Technologies Ltd. gained the most in more than a month after the billionaire investor Rakesh Jhunjhunwala-backed gaming platform posted a threefold jump in net profit in the first quarter of this fiscal.
The company's net profit stood at Rs 16.5 crore in the quarter ended June, up 237% sequentially.
Q1 Key Highlights (Consolidated, QoQ)
Revenue increased 27% to Rs 223.1 crore
Ebitda stood at Rs 30.1 crore, up 102%
Ebitda margin was at 13.5% against 8.5%
The multi-pronged approach to capture opportunities have been yielding positive traction and the company is in line with target growth plans for FY23, Nazara's Chief Executive Officer Manish Agarwal said.
"On the operating margin front, we have made investments in business segments that will provide us with robust growth opportunities in the years to come," he said in an earnings statement released Friday. "The company will continue to look for growth opportunities both organically and inorganically. In particular, we are looking to augment presence in freemium segment, especially in developed markets."
Shares of Nazara jumped as much as 20%, the most since June 24, to Rs 636.15 apiece and remained locked in at upper circuit as of close on Monday. Of the 10 analysts tracking the company, six maintain a 'buy' and two each suggest a 'hold' and a 'sell', according to Bloomberg data.
The 12-month consensus price target implies an upside of 31.3%.
Here's what brokerages made of Nazara's Q1 FY23 results:
Has a 'buy' rating on the stock.
Strong growth with in-line margin.
Kiddopia revenue growth was stunted at 0.8% YoY.
Revenue from telecom subscription segment declined, whereas real money gaming and freemium revenue was up 527.3%.
Nazara trades at EV/sales multiple of 2.9x/2.4x Dolat Capital's FY23/FY24 sales estimates.
Results beat, gamified early learning recovers due to pricing, e-sports growth on IP and strong active users.
Inorganic growth contribution largely led to the beat, that is, Datawrkz acquisition, an entity in adtech. While Datawrkz acquisition did contribute most of the delta, e-Sports division growth was notable at 11.7%/92.3% QoQ/YoY growth.
Management also mentions that even post price increase, Kiddopia (gamified early learning business) has lower pricing versus peers, thus leaving further headroom for further price increase.
Esports business (Nodwin, OML, Publishme, Sportskeeda) grew by 11.7% QoQ to Rs. 102.3 crore.
Nazara delivered strong set of results across segments, though outperformance was largely led by adtech business.