Rakesh Jhunjhunwala backed Nazara Technologies kicked off its IPO on Wednesday and was subscribed 3.8 times on Day 1. The mobile gaming company saw its issue oversubscribed within a few hours on the very first day. The IPO was set between the price band of Rs. 1,100-1101, with 5.29 million shares on for grabs. These 5.29 million shares represent 16.7% of the company. Ahead of its IPO, the company boasted that it had already garnered Rs. 260 crores from 43 anchor investors.
Nazara Technologies is India’s only company to have IP (intellectual property) rights and assets across regional, international and national e-sports technologies. During the Financial Year 2020, the company’s e-sports content businesses grew over a staggering 60% and have seen a rise in the last 3 financial years. The company is also backed by the biggest investors like Government of Singapore, Goldman Sachs India, Nomura Funds, Steadview Capital Mauritius, Abu Dhabi Investment Authority and more.
As for the company’s aims, the mobile gaming company has plans establish itself as the leader in the emerging markets of interactive gaming. The company is looking to cater a billion plus mobile gamers for whom multiplayer interactive gaming is the primary source of entertainment. The company will be achieving this through its upcoming interactive mobile games, a diverse e-sports content catalogue. And even early learning apps that gamify the process of learning. As of Financial Year 2020, the company’s MAU (monthly active users) stood at an average 4 crore concurrent users, which rose to 5.75 crore for the 9-months through December 31, 2020.
However, the company also reported a loss in the Financial Year 2020, for 6-months straight which ended in September 30, 2020 and continued incurring several financial losses. The company currently has had a negative cash flow in the past. Moreover, the subscribers may see the company suffer some losses as it may not be able to effectively monetize its e-sports content catalogue and its other offering in the initial stages.
Meanwhile, Nazara Technologies showed a strong revenue growth of 45.9% to Rs. 247 crore after registering a fall of 1.4% in Financial Year 2019. For the first half of the 2021 financial year, the company has already recorded more than Rs. 200 crore in revenues.
Aditya Birla gave an interesting insight on the company’s IPO and said, “The gaming industry is set to witness 30 per cent plus CAGR over 2020-2023E on the back of high mobile penetration, increasing internet penetration and increasing number of gamers. Nazara has a widespread presence both in terms of geography and product portfolio which offers strong growth visibility. The IPO is valued at 8.3 times on H1FY21 (annualised) price/ sales, which we believe is reasonable when compared to the newly listed technology stocks “
When it comes to earnings, the company laps up the 39% of revenues from its Gamified Early Learning, 23% from e-sports, 21% from its telco subscriptions, 5% from its fermium category mobile games and 3% from fantasy money games.
When asked about the reasoning behind its Initial Public Offering, the company claimed that being listed will enhance its brand name and establish the brand as one that will make waves in future. Moreover, listing equity would also provide to the current shareholders of the company.
