The IPO is an offer for share (OFS) of 5.29 million shares being sold in the price band of Rs 1,100 to Rs 1,101 per equity share, representing 16.7 per cent stake in the company. Ahead of its IPO, the company allotted Rs 261 crore worth shares to 43 anchor investors at Rs 1,101 per piece.
Nazara is the only company in India to have rights over IP and assets across grassroot, regional, national and international eSports. The company has market-first positions in India across sports simulation and eSports. Its eSports content business grew by 60 per cent in FY20 and has grown by nine times in the last three years.
The IPO is a play on the under-penetrated Indian gaming and global gamified early learning market, which are expected to grow at an annual pace of at 30-40 per cent over 2020-2023. Antique Stock Broking said that its a first of its kind company getting listed in India and could command a significant premium given high expected growth rates, lack of opportunities in space.
Motilal Oswal Securities likes Nazara given its leadership in highly under-penetrated mobile gaming, wide product portfolio and strong relationship and network. Analysts said Nazara is expected to witness strong growth for next 2-3 years given its recent acquisitions and first mover advantage.
“The issue is valued at 5.5 times FY21 P/BV and 7.6 times FY21 EV/Sales on an annualised and post issue basis. The issue is first of its kind listing and has no peer comparison in India. We believe that the market would like to give premium valuation to emerging growth stories like mobile gaming,” Motilal said.
At the upper limit of the price band, the issue would garner Rs 582.91 crore from investors.
Global gaming industry size stood at $157.50 billion in 2020. But the size of Indian gaming industry stands merely at $1.5 billion, roughly 25 per cent of the Bollywood. The rising smartphone and internet penetration are leading the growth for the industry.
“The gaming industry is set to witness 30 per cent plus CAGR over 2020-2023E on the back of high mobile penetration, increasing internet penetration and increasing number of gamers. Nazara has a widespread presence both in terms of geography and product portfolio which offers strong growth visibility. The IPO is valued at 8.3 times on H1FY21 (annualised) price/ sales, which we believe is reasonable when compared to the newly listed technology stocks (Avg 13 times),” said Aditya Birla Money.