Nazara Technologies IPO: All You Need To Know
An attendee plays the “Mario Kart 8 Deluxe” video game on a Nintendo Co. Switch game console during an unveiling event in Tokyo, Japan. (Photographer: Kiyoshi Ota/Bloomberg)

Nazara Technologies IPO: All You Need To Know

Nazara Technologies Ltd. will sell shares at Rs 1,100-1,101 apiece in its initial public offering that commences on March 17, the first by an Indian gaming and diversified sports platform.

The company—which is also India’s only gaming firm with a presence in emerging and developed markets such as African and North American countries—has offerings like interactive gaming, e-sports and gamified early learning ecosystems. Veteran investor Rakesh Jhunjhunwala owns 32,94,310 shares—or 11.51% stake—in the company as on Sept. 30, 2020, according to the company’s draft red herring prospectus.

Key Details

  • Issue opens on: March 17, 2021.

  • Issue closes on: March 19, 2021.

  • Face value: Rs 4.

  • Issue size: Up to Rs 583 crore.

  • Shares on offer: 52.94 lakh.

  • Minimum bid size: 13 shares.

  • Listing on: BSE and NSE.

  • Book running lead managers: ICICI Securities, IIFL Securities, Jefferies India and Nomura Financial.

The company informed the exchanges on March 16 that it has raised Rs 261.37 crore by allotting 23.73 lakh shares to 43 anchor investors at Rs 1,101 apiece.

Objectives

The issue comprises an offer for sale of up to 52.94 lakh equity shares, with various stakeholders looking to encash whole or part of their stake in the company.

Business

Nazara Technologies derives nearly 41% of its revenue from India, with North America contributing an equal share in FY21 from 12% a year ago. That came after it acquired Kiddopia, a learning application for kids, in July 2020.

The company has a diversified presence across verticals, with gamified e-learning and e-sports accounting for the largest share of revenue in FY21.

Its telco subscription offerings comprise over 1,021 android games, which primarily target mass-mobile internet users in emerging markets, including first-time mobile gamers. Monetisation is through periodic, daily, weekly or monthly subscriptions through carrier billing, depending on arrangements with telecom operators.

Nazara aims to cater to billion plus mobile internet players across emerging markets, for whom social multiplayer interactive gaming is a key form of entertainment. The company seeks to achieve this through interactive mobile games, e-sports content and gamified early learning apps.

The company’s monthly active user base stood at 4 crore on average in FY20, which rose to 5.75 crore for the nine-months through Dec. 31, 2020.

Risks

Internal risk factors highlighted by the company.

  • Nazara Technologies reported a restated loss in FY20 and for the six-month period ended Sept. 30, 2020, and may incur additional losses in the future.

  • One of its group companies incurred losses in the last three fiscals.

  • The company has had negative cash flows in the past, which may recur in the future.

  • It may be unable to effectively monetise its e-sports offerings, materially and adversely affecting business, financial condition and cash flows.

Financials And Valuations

The company’s revenue rose in FY21, as millions stayed home and took to internet-based entertainment amid pandemic-induced lockdowns.

Key Business Strategies

  • Continue to build on leading market position and growth opportunity in India.

  • Continue global expansion leveraging the existing distribution network.

  • Enhance existing offerings and increase monetisation opportunities.

  • Launch new IP and titles across content and games.

  • Pursue strategic investment and acquisition opportunities.

* Data also sourced from Axis Capital reports.

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