Digital gaming and sports platform Nazara Technologies posted about a 17% decline in consolidated net profit at ₹14.8 crore in the third quarter as compared to ₹17.9 crore in the year-ago period. Its consolidated revenue from operations grew 42% to ₹185.8 crore from ₹130 crore year-on-year (YoY).
Nazara Tech reported revenue growth beat was driven by strong traction in Nodwin Biz & Sportskeeda. EBITDA Margin improved to 16.3% due to better profitability in eSports, highlighted analysts at Dolat Capital in a note.
“Nazara offers an opportunity to buy on a portfolio approach thus neutralizing the risk while opening up doors to play a part in megatrend of Gaming in India with significant optionality,” they added. The brokerage has maintained Buy rating on the stock with a target price of ₹2,600.
The company has witnessed 75% year-on-year growth in the e-sports segment for nine months of the financial year 2022, led by strong growth in revenue across all sub-segments in Nodwin and SportsKeeda, Nazara Technologies Group CEO Manish Agarwal said in the earning release.
“Though Kiddopia is facing growth headwinds, E-Sports is expected to grow at 39.4% CAGR over FY22-FY24 backed by consolidation of OML. Further, revenue in RMG segment is also expected to rise by 2.4x over next 2-years post-acquisition of OpenPlay,” said analysts at Prabhudas Lilladher.
They have retained their Buy rating on Nazara Tech shares with a DCF based target price of ₹2,544. “Overall, we expect revenue revenue/EBITDA CAGR of 32%/28% over FY22-24E and the growth story remains intact despite near term challenges,” the brokerage note added.
Shares of Nazara Technologies have declined about 7% in 5 days whereas they are down over 23% in the last month. As per BSE shareholding pattern, ace investor Rakesh Jhunjhunwala owns 10.10% stake in the company as of December 2021.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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