Rakesh Jhunjhunwala-Backed Nazara Tech Stock Gains On OpenPlay Buy
Nazara Tech agrees to buy OpenPlay for Rs 186.4 crore.
Shares of Nazara Technologies Ltd. rose after the online gaming platform agreed to fully acquire OpenPlay Technologies Pvt. for Rs 186.4 crore in a cash and share-swap deal.
In the first tranche, Nazara shall acquire 23.30% of the issued and paid-up share capital of OpenPlay for Rs 43.43 crore by the end of September, the Rakesh Jhunjhunwala-backed company said in an exchange filing after market hours on Friday.
The second tranche of cash of or swap of shares, will be determined by the company at its sole discretion at the time of closing, the filing said. Nazara aims to complete that by March end.
Hyderabad-based OpenPlay, the operator a multi-game consumer gaming platform Classic Games, has an annualised gross gaming revenue run rate of Rs 80 crore, and operates on Ebitda positive margin, the filing said.
“The OpenPlay acquisition offers an opportunity for Nazara to build a network of skill gaming destinations operating on one common tech platform,” Manish Agarwal, chief executive officer at Nazara, said in the filing.
OpenPlay becomes the latest entry on ‘Friends of Nazara’—a network of gaming companies that Nazara is building via mergers and acquisitions. It includes Nodwin Gaming, Sportskeeda, Next Wave Multimedia and Paper Boat Apps, developers of popular gamified early learning app Kiddopia.
Last week, Jefferies initiated coverage on Nazara with a ‘buy’ rating, citing, among others, its presence in India’s gaming and e-sports market and its ability to realise synergies, which is reflected in acceleration of growth of the acquired companies post-acquisition.
CLSA, too, has initiated coverage but with a ‘sell’ rating. It, however, said Nazara in the last four years has done successful strategic acquisitions. “If it continues to make successful acquisitions and scale them, then there would likely be upside risks to our growth forecasts.”
Shares of Nazara gained as much as 6% around 1:00 p.m. on Monday to Rs 1,811 apiece. Of the five analysts tracking the company, four have a ‘buy’ rating and one recommends a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 12.5%.
The stock, which listed on March 30, has rallied more than 64% from its IPO price of Rs 1,101 apiece. The company’s Rs 583-crore maiden offer is the third-most subscribed issue of the year so far.