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.
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.
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:
SELLING SHAREHOLDER | SHARES OFFERED |
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
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.
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
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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