Analysts see upto 70% rally on this Rakesh Jhunjhunwala portfolio tech stock
1 min read 17 May 2022, 12:14 PM ISTIndian ace investor Rakesh Jhunjhunwala owns 10.10% stake in the gaming tech company as of March 2022
PremiumBrokerage Prabhudas Lilladher expects Nazara Technologies' revenue/profit after tax (PAT) CAGR of 28%/52% respectively over FY22-24E and the growth story remains intact despite near term challenges.
While management is exploring additional marketing channels, achieving pre-Apple policy era’s subscriber addition figures will be difficult in near term, as per the brokerage. It has retained its Buy rating on Nazara Tech shares with target price of ₹1,747.
“The stock currently trades at EV/sales multiple of 3.9x/3.2x our FY23/FY24 estimates and post recent correction, valuation is now more in sync with global peers like Electronic Arts and Zynga which trade at 1 year forward multiple of 3-4x," the note stated.
Given the infancy stage of the gaming industry in India with Average Rev Per Gamer of just $10 p.a. (versus US/China at $73/$35), analysts at brokerage Dolat Capital believe that the company can compound its revenues by 10x over a decade.
“We have currently factored in revenue compound annual growth rate (CAGR) of 39% (unchanged) over FY22-25E in its hyper-growth stage and gradual deceleration to 26% CAGR (earlier 25%) over FY25-30E, Average EBIT margin of 15.6% (earlier 17%) and terminal growth rate of 4%," the note stated.
Based on these parameters, the brokerage house has arrived DCF based fair value of ₹2,100 apiece, implying nearly 70% upside from current stock level, and assign Buy rating to the tech stock.
As per BSE shareholding pattern, Indian ace investor and stock market trader Rakesh Jhunjhunwala owns 10.10% stake in the gaming tech company as of March 2022.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
