Rakesh Jhunjhunwala stock tanks: Nazara Tech shares down 57% YTD, brokerage says valuations rich; check rating
Rakesh Jhunjhunwala’s portfolio stock Nazara Technologies rallied nearly 6 per cent to Rs 1,055.40 apiece on BSE on Thursday, after the gaming stock hit a fresh all-time low of Rs 998.05 in the previous session. The stock rose to a lifetime high of Rs 3,356 apiece in October last year; however, since then this Jhunjhunwala stock has corrected more than 68 per cent. Year-to-date (YTD), Nazara Tech stock has shed over 57 per cent in price. Domestic research and brokerage firm JM Financial Services has initiated coverage on Nazara Technologies, saying valuation is ‘rich’.
JM Financial has recommended to hold the stock as it believes that in the near-term, eSports will continue to drive this gaming stock’s growth, aided by recent acquisitions. eSports is Nazara’s largest (49% revenue share, FY22) and fastest-growing segment. Nodwin, Nazara’s eSports subsidiary, has 80% market share in India’s nascent (USD 100mn) but fast-growing eSports market. Nazara’s partnership with global eSports platforms, game publishers and brands position it uniquely to lead eSport penetration in India, JM Financial said.
JM Financial analysis indicated that Nazara has been able to scale up its investments where incremental investment needs were neither very high nor margin dilutive. For example, Nazara has scaled eSports and Kiddopia after acquiring them due to a market leadership position (Nodwin). In fantasy sports, on the other hand, where higher competitive intensity required significant burn for customer acquisition, the company has scaled back. Similar is the case with freemium, which has slowed down after acquisition.
Nazara Tech share price underperforms Nifty 50 YTD
Nazara Technologies share price has corrected 57 per cent YTD and has underperformed the Nifty (-11.4% YTD), which should limit significant downside from current levels, JM Financial noted. It also added that rising competitive intensity and the company’s margin focus limit near-term growth triggers.
Nazara Tech fixes record date for bonus issue
The board of Nazara Technologies has fixed 27 June 2022, as the record date for the proposed bonus issue of shares. The company’s board approved a bonus of one share against each share held by the shareholders.
“It is hereby informed that the Board of Directors of the Company has fixed Monday, June 27, 2022, as the Record Date, for the purpose of ascertaining the eligibility of shareholders for issuance of Bonus Equity Shares of the Company in the proportion of one new fully paid-up equity shares of Rs 4 each for every one fully paid up an existing equity share of Rs 4 each held,” Nazara Tech informed in an exchange filing last week. Bonus shares are fully paid additional shares issued by a company to its existing shareholders.
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