Brokers

Broker’s call: Nazara Tech (Buy)

Target: ₹1,747

CMP: ₹1,242.75

We cut our EPS estimates by 6 per cent/18 per cent for FY23/FY24 respectively as subscriber acquisition continues to remain a challenge in Kiddopia. While management is exploring additional marketing channels and has ear-marked a higher sum of $1.5-1.6 million per month for Q1-FY23E; achieving pre-Apple policy era’s subscriber addition figures will be difficult in near term.

Though Kiddopia is facing growth headwinds, E-Sports and Real Money Gaming (RMG) is expected to grow at a strong pace due to consolidation of OML and OpenPlay respectively. Overall, we expect revenue/PAT CAGR of 28 per cent/52 per cent respectively over FY22-24 and the growth story remains intact despite near term challenges.

Consequently, we retain our Buy rating on Nazara with a DCF based TP of ₹1,747 (earlier ₹2,550). The stock currently trades at EV/sales multiple of 3.9x/3.2x our FY23/FY24 estimates and post recent correction, valuation is now more in sync with global peers like Electronic Arts and Zynga which trade at 1 year forward multiple of 3-4x.

Key points: Kiddopia lost ~19K subscribers in 4QFY22 and management is exploring additional marketing channels to boost growth; Board recommends bonus in the ratio of 1:1.

Published on

May 18, 2022

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button
SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.