BackNazara Technologies IPO: Grey market premium, other details in 10 points
Ace investor Rakesh Jhunjhunwala holds more than 10% stake in Nazara TechnologiesMarket analysts expect a strong response by investors to Nazara Tech IPO
PremiumThe IPO of gaming firm Nazara Technologies opened today to strong demand and the company, backed by ace investor Rakesh Jhunjhunwala, has set a price band of ₹1,100-1,101 a share for the issue. The initial public offering will conclude on March 19. At the upper end of the price band, the IPO is expected to fetch ₹583 crore. According to grey-market trackers, shares of Nazara Technologies are quoting at a premium of ₹840. Rakesh Jhunjhunwala held 11.77% stake Nazara Technologies as of March 2020, according the company's draft prospectus.
Nazara Tech IPO was subscribed 4.01 times at the end of Day 1. Ahead of the IPO, Nazara Technologies had mopped up ₹261 crore from anchor investors.
Here are 10 things to know about Nazara Technologies IPO:
1) Market observers expect a strong investor response to the issue. "Nazara Technologies is a much awaited IPO which operates in a niche sector and currently market is appraising unique and digital theme stocks at premium valuations. Gaming may be the theme of coming decade on account of 5G rollover and deep penetration of smartphones and apps," says Abhay Doshi, who is the founder of UnlistedArena.com, which deals in pre-IPO and unlisted shares.
2) Link Intime India Private is the registrar of the IPO. According to brokerages, share allotment is likely to be finalised on March 24 while listing may happen on March 30.
3) In this issue, 75% is reserved for qualified institutional buyers (QIB), 15% for HNIs and 10% for retail investors.
4) The issue comprises offer for sale by promoters and other shareholders. Nazara Technologies Ltd. will not receive any proceeds from the offer.
5) The company said that listing of equity shares will enhance its brand name and provide liquidity to the existing shareholders.
6) Post-IPO, the promoters shareholding will fall to from 20.7% to 23%.
7) Nazara Technologies Ltd. is a diversified gaming company with offerings across the interactive gaming, eSports and gamified early learning systems.
8) "Nazara Technologies is present in the fast growing segment of interactive gaming, eSports and gamified early learning solutions. After posting a degrowth of 1.4% in FY2019 the company has posted strong revenue growth of 45.9% in FY2020 to ₹247.5 cr. The company has already posted a revenue of ₹200 crore in H1FY2021. The company has been reporting losses as they have increased their spending significantly on advertising & promotion from FY2020 onwards which will help drive strong topline growth for the company. At current levels the stock is trading at EV/Sales of 11.6xFY20 revenues and we recommend a "subscribe" rating to the IPO given strong growth potential for the company," Angel Broking said in a note.
9) In a note Aditya Birla Money said: "The gaming industry is set to witness 30%+ CAGR over 2020-2023E on the back of high mobile penetration, increasing internet penetration and increasing no. of gamers. Nazara has a wide spread presence both in terms of geography and product portfolio which offers strong growth visibility."
10) "The IPO is valued at 8.3x on H1FY21 (annualised) Price/ Sales which we believe is reasonable when compared to the newly listed technology stocks (average nearly 13 times). We assign SUBSCRIBE rating on the issue," it added.
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