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Rakesh Jhunjhunwala portfolio stock could rally 191% to set a new high

On the BSE, the shares of Nazara Technologies had touched a 52-week-high of  ₹1,677.20 on 11.10.2021 and the stock is currently trading at a market price of  ₹622.10 which indicates that at the current level is trading at a discount of 62.90% from 52-week-high. (MINT_PRINT)Premium
On the BSE, the shares of Nazara Technologies had touched a 52-week-high of 1,677.20 on 11.10.2021 and the stock is currently trading at a market price of 622.10 which indicates that at the current level is trading at a discount of 62.90% from 52-week-high. (MINT_PRINT)

  • Rakesh Jhunjhunwala portfolio stock Nazara Technologies Ltd is a small-cap company having a market cap of 4,070 Crore operating in the consumer discretionary sector.

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Rakesh Jhunjhunwala portfolio stock Nazara Technologies Ltd is a small cap company having a market cap of 4,070 Crore operating in the consumer discretionary sector. The company is well-known gaming and sports media platform with operations not just in India but also in Africa and North America. On the BSE, the shares of Nazara Technologies had touched a 52-week-high of 1,677.20 on 11.10.2021 and the stock is currently trading at a market price of 622.10 which indicates that at the current level is trading at a discount of 62.90% from 52-week-high. However, the brokerage company Prabhudas Lilladher is bullish on the stock and has set a target price of Rs. 1,813, a new high for the stock, from which the potential upside from the present level is calculated to be 191 per cent.

The brokerage has said “We hosted Mr Manish Agarwal, CEO of Nazara Technologies for a NDR recently. Management indicated that Battle Grounds Mobile India (BGMI) Master Series IP which is to be telecast on Star Sports from June-24 to July17 is likely to be profitable from first year itself. With respect to off-line events in ESports, incremental revenue addition is expected to be Rs600-700mn (more or less in-line with the guidance given earlier) in FY23E. However, for Kiddopia while US$400K was earmarked to be spent on YouTube, Nazara expended just US$100K and since LTV/CAC went beyond guard rate, incremental spends have been curtailed. Even the brand building exercise (sum ear-marked was US$300-400K per month) has not yielded desired results and hence fresh spends have been paused."

The brokerage has said “RMG segment is witnessing steady growth since OpenPlay acquisition and monthly revenue run-rate has increased from ~Rs35mn to ~Rs50mn. Moreover, in near term, Nazara plans to integrate HalaPlay into OpenPlay’s platform (by July-August) so as to draw benefits from network effect. Management is not averse to M&A in this segment provided regulatory risks wade off. Lack of framework for online skill based gaming and uncertainty surrounding GST rate is acting as a hindrance for sustained growth in RMG segment."

“Overall, we have increased our EPS estimates by 2-3% and expect sales/PAT CAGR of 35%/54% respectively over FY22-24E. Though growth challenge in Kiddopia persists, Esports is likely to emerge as key growth lever as TV broadcasting during prime time will help increase viewership and popularity multi-fold in future. Retain BUY with a DCF based TP of Rs1,813 (earlier Rs1,747)," claimed Prabhudas Lilladher.

According to Nazara Technologies' shareholding pattern for the quarter ended March 2022, big bull Rakesh Jhunjhunwala holds 32,94,310 shares, or 10.10% stack in the company.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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