Shares of Nazara Technologies fell 4% to Rs 653.45 on BSE during Tuesday’s intraday trading after the Tamil Nadu cabinet on Monday approved an order banning online gambling in the state. After gaining approval from the Governor of Tamil Nadu, the ordinance would be enacted in the state, news agency ANI reported.
Nazara Technologies is primarily engaged in the provision of subscription/download games/other content through a consumer base in India and globally, and digital support services to group companies.
As of 11:41 a.m., the stock had partially recovered from its intraday low and was down 2.4% at Rs 663.70, against an unchanged S&P BSE Sensex. The stock had hit a 52-week low at Rs 484 on June 22, 2022 and a record high of Rs 1,677 on October 11, 2021.
However, over the past week, Nazara Technologies has fallen 10%, compared to a 4% decline in the benchmark. Moreover, in the last six months it has dropped by 19%, while in the last year it has dropped by 41%. By comparison, the Sensex fell 0.38% and 4.9%, respectively, over the same period.
The gaming industry is growing at a rapid pace across the world. Due to the widespread availability of smartphones and affordable technology, along with increasing disposable income, the industry is poised to take off, and gradual penetration into previously untapped markets will fuel growth, enabling industry to make a significant contribution to the economy. . As the number of gamers in India grows, a hands-on gaming culture will emerge.
Online gaming is going through a paradigm shift. By 2025, 500 million people are expected to participate in online gaming, making it the fourth largest component of India’s media and entertainment industry.
“A variety of industries are expected to experience dramatic growth, including esports, fantasy sports, casual games and other games of skill. Strong user engagement is expected for gaming event IPs, including including esports leagues, national online gaming tournaments and multi-game platforms, where gaming needs to be combined with social interaction and commerce,” Nazara Technologies said in the FY22 annual report.
Meanwhile, analysts at Jefferies have a ‘buy’ rating on Nazara Technologies with a price target of Rs 860 per share as it raised earnings/Ebitda estimates by 5-13% to account for the acquisition and stronger growth prospects for Sportskeeda, and expect Nazara to generate CAGRs of 25-27% in revenue/EBITDA in FY23-26.
“Nitish Mittersain, Founder and Managing Director of Nazara Technologies, noted that growth prospects for Nodwin and Sportskeeda remain strong. Recent price increases of Kiddopia and the acquisition of Wildworks will help drive growth in the learning segment. While RMG remains an attractive market, Nazara is unlikely to play a significant role until regulatory clarity emerges,” the brokerage said in a stock update.