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Nazara Technologies IPO: Is It As Playful As It Seems?

by Tavaga Invest

Nazara Technologies Limited, a leading mobile gaming company, has launched its IPO at a price band of INR 1,100 to INR 1,101 per share with the issue closing on Mar 19, 2021.

IPO snapshot:

Nazara Tech IPO snapshot

About Nazara Technologies:

Nazara Technologies Limited (or ‘Nazara Tech’) is engaged in sports media and mobile gaming. It offers products ranging from interactive games to eSports. It also provides live streaming and on-demand eSports content as well as gamified early learning mainly across various emerging market countries. It is backed by the big bull of India, Mr. Rakesh Jhunjhunwala.

They have revenues diversified across geographies and intend to scale up globally. ESports, Telco Subscriptions(~1000 android games) as well as Gamified Early Learnings are the major segments in which the company operates.

Product portfolio:

    • Kiddopia
    • Nodwin
    •  Sportskeeda
    • World Cricket Championship (WCC)
    • CarromClash
    • Halaplay
    • Qunami

Objects of the issue:

Since this is not a fresh issue, no new capital would be raised through the IPO and the proceeds would flow to the following shareholders:

IIFL SPECIAL OPPORTUNITIES FUND                 12,67,435
IIFL SPECIAL OPPORTUNITIES FUND – SERIES 4                 10,36,286
IIFL SPECIAL OPPORTUNITIES FUND – SERIES 5                   8,73,989
IIFL SPECIAL OPPORTUNITIES FUND – SERIES 2                   8,16,804
MITTER INFOTECH LLP                   6,91,900
IIFL SPECIAL OPPORTUNITIES FUND – SERIES 3                   3,93,349
GOOD GAME INVESTMENT TRUST                   1,50,000
SEEDFUND 2 INTERNATIONAL                       25,000
PORUSH JAIN,                       23,725
AZIMUTH INVESTMENTS                       14,959
SEEDFUND 2 INDIA                             945
TOTAL                 52,94,392

Source- Tavaga Reseach

Industry overview:

The gaming industry is globally among the fastest-growing segments within media and entertainment. Overall the gaming industry beats even movies and music with a market size of ~$160 Bn in 2020. Mobile gaming specifically, is estimated to reach ~120 Bn by 2023.

In India as well gaming industry is picking up. Where it was just ~$0.5 Bn i.e. ~25% of the size of Bollywood in 2016, it reached a level of ~$1.2 Bn and ~50% of Bollywood in just 3 years. Further, it is expected to reach a level of ~$3.5 Bn by 2023.

The growth story

Mobile competitive gaming and eSports have gained significant traction globally and brought gaming to mainstream media and entertainment. eSports where Nazara Tech dominates is growing rapidly. From a market size of ~521 Mn in 2016 it grew straight up to ~$1,021 Mn by 2020. The Indian eSports audience which was just 6 Mn in 2017 has grown to reach around 17 Mn in 2020. This could be attributed to the increased penetration of smartphones, increased investments, and regional language options available.

EduTech which had a global market size of ~$27 Bn in 2016 has more than doubled to reach ~$61 Bn in 2020 and in India has grown more than 4 times during the same period. The gaming industry has also expanded its application, through “gamified early learning” which revolutionizes education by providing synergies. Gamified Early learning which stood at ~$2.4 Bn in 2016 globally attained a level of ~$9.8 Bn in 2020.

Overall all the segments where Nazara Tech operates have shown impressive growth in recent years and are expected to continue the momentum.S

What works and what does not work for Nazara Tech?


  • Diversified Operations: The company has a presence not just in India but globally. 40% – 50% of the revenues have come from other countries in the recent periods.
  • Dominant position in eSports: Nazara Tech dominates the eSports space in India with ~80% market share. Further their flagship in this space, Sportskeeda is the largest multi-sports news platform with over 20 million MAUs as of September 30, 2020. Relationships with global gaming publishers and platforms like ESL and Valve Corporation are also major factors leading to their success within eSports.
  • Big Bull Backing: Nazara Tech is backed by Mr. Rakesh Jhunjhunwala. With an ~11% stake, he has chosen to stay back while the company has launched its IPO which could work in favor here.


  • Recent Losses: In 2020, when many mobile-based platforms like Zoom picked up, Nazara Tech had incurred a loss of INR~27 crore. Further, during the last 6 months, it has made a loss of INR~10 crore already. This could be a negative indicator as overall the gaming industry showed healthy growth both at global and Indian levels during this period.
  • Tough Competition: The gaming and entertainment space is full of big players like Sony Interactive Entertainment, Reliance Jio, Tencent, and Microsoft Game Studios. New entrants like Dream11, Mobile Premier League (MPL), etc have also established themselves and it is probable to see more such companies entering the space due to low entry barriers.
  • Uncertainty: The gaming space is very hard to gauge due to the cyclical nature and changing consumer preferences. Even established games could lose traction and require constant enhancements to stay alive.
  • Dependency on Telecom Companies: Nearly 33% of the revenues in FY 2020 came from telecom subscriptions. Telecom is itself an ever-changing space in recent times. This makes it even more difficult to project the operations

Jhunjhunwala’s backing could provide listing gains and momentum in the short to mid-term, yet this is a very volatile space and hence, Tavaga recommends its investors to stay cautious and consult their investment advisors (SEBI RIA) before subscribing to the IPO.

The Grey Market Premium (GMP) as of today (17, March 2021) suggests that the Nazara Technologies IPO is about to list within a price range of Rs. 1900-2200, that is, a gain of 100% at the time of listing.

While the GMP of 900-1100 is encouraging news for IPO investors, especially the ones subscribing for listing gains, the long-term prospects of the company will only be clear post subsequent quarterly results and earnings call by the management.

Disclaimer: The above analysis is only for educational purposes and not a recommendation.

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