Nazara Technologies has registered a decline of 70 percent from its highest level. 1,601 and is now trading at an all-time low 486, said domestic brokerage house ICICI Securities in a research note.
Brokerage houses have initiated coverage given the visibility of strong revenue growth in eSports and gradual profitability improvement in Gamified Early Learning (GEL). Nazara Technologies The stock with ‘Buy’ rating and target price of 700 each.
“currently market price, it is trading at 45 times 1 year forward P/E. Our target price is 700 on the stock for 24th March. Our target multiple is 41 times FY25E EPS (1.5SD below 2-year average historical P/E),” said the note.
nazara is near 6.6 billion in cash, an additional 40 million in Silicon Valley Bank. The brokerage believes that once regulatory clarity emerges, it can be used to gain scale in real money gaming through acquisitions.
bull and bear case evaluation
Moreover, Najra can benefit from cheap acquisition opportunities in the current liquidity position. If these triggers work, the brokerage sees a bull case valuation 800 (for March 24).
However, if growth slows or margins do not improve, the brokerage sees valuations in a bear case 400 (for March 24), indicating an upside:downside ratio of 3.7:1, which makes it a compelling buy, it said.
ICICI Securities estimates 37 per cent on-year revenue growth in FY24E, led by 45 per cent YoY growth in eSports and 25 per cent YoY growth in GEL. The brokerage estimates EBITDA growth of 86 percent YoY in FY24E, led by an improvement in EBITDA margin by 250 basis points due to subscriber additions and price increases due to eSports IPs scale up and GEL profitability improving Is.
Key risks, according to the brokerage, include the company’s inability to set up its gaming accessories business, leading to lower margins, impact due to increased competition/slowdown in US markets, continued delay in RMG regulatory clarification and inability to identify and integrate acquisitions. includes disability.
As per the recent shareholding pattern on BSE, investor Rekha Jhunjhunwala holds 65,88,620 shares, constituting nearly 10 per cent stake in the tech company as of December 2022.
disclaimer, The views and recommendations given above are of individual analysts or broking companies and not of Mint,
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.