Nazara Technologies Ltd

Summary

Overall, Nazara is very excited about the opportunity presented by the massive growth in gaming in emerging markets. By transforming from a telco-driven subscription services company to a pure-play interactive gaming & sports media platform with leadership in several rapidly expanding verticals and a sizable opportunity, Nazara has established a solid foundation on which to continue gaining market share in the fast-growing gaming market. In the upcoming years, Nazara anticipates its revenue growth will be aggressive and that its profit margins will increase.

About Company 

The global gaming market is undergoing a change. As a result of the recent epidemic, there have been record-high levels of participation and investment in gaming in recent years. Nazara has adopted an ecosystem strategy in order to seize this large market opportunity. The company has developed distinctive intellectual properties (IPs) that have benefited our target market globally, and they have improved its business approach to keep up with shifting consumer trends.A prominent gaming and sports media platform with a foothold in India is Nazara Technologies and in both mature and developing international markets, including North America and Africa, using products from interactive gaming, esports, and gamified early learning ecosystems. As they create the material/ Content in-house for both an Indian and a worldwide audience.

Business Model

Share Holding Patten 

Financials

In Q4FY23, revenue increased by 65%.
• Business-related call-outs:
• Kiddopia is expanding again because of gamified early learning track (an increase of 12% in revenue and EBITDA in Q4FY23)
• Skill-based RMG: Due to operational improvements, Classic Rummy experienced an 11% revenue increase and 20% EBITDA growth in Q4FY23.
Sportskeeda's revenues increased by 41% in Q4FY23, while US revenues increased by 53% over the same period. Datawrkz revenue increased by 33% in Q4FY23.

Nodwin revenue increased by 57% in Q4FY23 due to growth in several IPs (Playground, Dgtl, etc.) as well as substantial development in the gaming accessories market.

Profit & Loss A/c 

In FY23 Revenue increased by 33% YoY, while EBITDA increased by 79% YoY as a result of significantly improved cost optimization. Removed players who were spending bonuses rather than earning income. Improving the player experience, branding, and CRM as well as the acquisition funnel.

Risk factor: The impact of the ban in Tamil Nadu prohibited online games with a chance of winning money, including poker and rummy, in April 2023. Since TN accounted for 20% of revenues and a significant portion of the player base in FY 23, the ban would have an immediate detrimental effect on the industry. We are actively attempting to reduce this negative risk.

Cash Flow

 Valuation 

Discloser 

The above study unit is just meant to be informative; it does not constitute trading or financial advice. I am not a SEBI registered person or business.

Notes on Concall for May 2023

Fundraising :

Nodwin Gaming raised INR 232 crores ($31.4 million) through a primary fund raise and a secondary share sale. The funds will be used to expand the eSports ecosystem, incubate newer IPs, increase the company's footprint in emerging markets, and make strategic acquisitions.

Investments Plans :

• The sports media business Nodwin, which focuses on eSports, intends to make short-, long-, and medium-term investments in creating intellectual properties and enticing partners.
• Plans to spend some of the capital on testing out new communities and games, as well as constructing horizontals and locating revenue centres that are highly value-accretive for the company globally.
• Nazara Technologies intends to increase its business investment, ecosystem development, and asset acquisition efforts.

Strategic Investor :

• Nodwin's investors give the business the patient, long-term financing it needs to develop.
Sony's investment is considered a possible collaboration for future growth; Krafton invested in Nodwin and saw a 270% return on their investment in around 25 months.

Conclusion: 

Nazara Technologies is a promising business with a proven track record of expansion, in the eyes of investors. The business is well-positioned to profit from the expansion of the global gaming sector and holds a dominant position in the Indian gaming market. Additionally, Nazara Technologies' range of goods and services is diverse, which lessens its dependency on any particular market. Overall, Nazara Technologies is a wise investment for those seeking exposure to the expanding gaming sector. Before investing in the company, however, investors should be aware of the hazards.