Nazara Technologies Ends 20% Lower Than Issue Price On Market Debut
An attendee plays a video game during an expo in Los Angeles. (Photographer: Patrick T. Fallon/Bloomberg)

Nazara Technologies Ends 20% Lower Than Issue Price On Market Debut

Shares of Nazara Technologies Ltd. fell 20% from its listing prices as investors chose to book profits at elevated levels.

The stock surged on market debut after investors piled into the initial public offering of the online gaming platform, making it the second-most subscribed issue so far in 2021.

The stock listed at Rs 1,971, a 79% premium to its issue price of Rs 1,101 apiece, according to data available on the bourses. The shares hit an intraday high of Rs 2,026, rising as much as 84% in early trade on Tuesday.

The Rs 583-crore IPO of Nazara Technologies was subscribed 175 times. The demand was led by non-institutional investors, who bid 390 times the shares on offer. The portions for institutional and retail investors were subscribed 103 times and 75.3 times, respectively.

The issue received bids for 92.88 crore shares compared to the 52.94 lakh on offer. The units were sold at Rs 1,100-Rs1,101 apiece.

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. The firm had also raised Rs 261.37 crore by allotting 23.73 lakh shares to 43 anchor investors at the upper end of the IPO price band.

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.

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 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, according to the internal risk factors highlighted by the company.

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

The stock ended 44.6% higher at Rs 1,592.

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