This Rekha Jhunjhunwala gaming stock is poised to grow by Rs 300 - should you buy?

Nazara Technologies share price: Rekha Rakesh Jhunjhunwala-owned gaming stock Nazara Technologies is poised to grow nearly 60 per cent or Rs 300 per share on the back of a strong business outlook, including stellar revenue growth, domestic brokerage firm ICICI Securities said in its report.

Shares of Nazara Technologies – a diversified gaming and sports media platform – closed flat with a positive bias at Rs 508.45 per share on Thursday, after gaining as much as 3.5 per cent to hit a day’s high level of Rs 524 per share on the BSE. 

The surge in the counter can be attributed to the gaming company’s announcement of its subsidiary acquiring a 73 per cent controlling stake in Pro Football Network.

Nazara Technologies acquires Pro Football Network

Sportskeeda Inc – a wholly-owned subsidiary of Absolute Sports – has signed definitive agreements for the acquisition of 73.27 per cent of the capital stocks of Pro Football Network LLC at a consideration of US $1.817 million, to be paid in cash. 

Sportskeeda, one of the world’s leading providers of sports news and analysis with over 76 million monthly active users, is also a subsidiary of Nazara Technologies.

ICICI Securities upbeat on Nazara Technologies

Nazara could benefit from inexpensive acquisition opportunities in the current liquidity situation, according to ICICI Securities. The brokerage sees a bull case valuation of Rs 800 for March 2024 in case key triggers of growth play out and a bear case valuation of Rs 400 in case growth slows. 

This implies an upside: downside skew of 3.7:1, which makes it a compelling ‘Buy’, as per the brokerage's view. It added that the company shows the visibility of strong revenue growth in eSports and gradual profitability improvement in gamified early learning (GEL).

Rekha Jhunjhunwala Stock: Nazara Technologies

Nazara Technologies is a Rekha Jhunjhunwala portfolio stock, a well-known stock market investor. 

She holds about a 10 per cent stake or 65,88,620 equity shares in the gaming company, according to the December 2022 shareholding pattern available on the exchanges. 

She publicly holds 29 stocks with a net worth of over Rs 25,680.4 crore as of March 23, 2023, according to the stock analysis portal trendlyne.com. 

Rekha Jhunjhunwala and family topped the list of the top 16 new Indian billionaires in 2023's Hurun Global Rich List.

Available at around 70% discount – right time to buy?

At the current market price, Nazara Technologies stock is available at nearly 70 per cent discount from its life-high level of Rs 1,601 apiece touched in October 2021. This is months after the Nazara Technologies stock made a bumper market debut in March 2021. The stock has corrected around 40 per cent from its issue price. 

Besides, it is down over 41 per cent in the last one year as compared to a 0.5 per cent rise in the BSE Sensex and slipped by 25 per cent in the past six months against an over 1 per cent gain in the benchmark index.

Nazara Technologies’s SVB connection

According to the Zee Business report, the two step-down subsidiaries of Nazara Technologies has moved out of Rs 64 crore held in Silicon Valley Bank.

Nazara had informed that both the companies -- Kiddopia Inc and Mediawrkz Inc -- have been given unrestricted access to the entire amount of $7.75 million (Rs 64 crore) that was held at SVB.