From its peak, Nazara Technologies has had a decrease of 70%. 1,601 and is currently trading at an all-time low of 486, according to a research report from domestic brokerage company ICICI Securities.
With the apparent robust revenue growth in eSports and the progressive profitability improvement in gamified early learning, the brokerage house has started covering on Nazara Technologies shares with a “Buy” rating and target price (GEL). 700 each.
“It is trading at 45 times 1-year ahead P/E at the present market price. For the 24th of March, our target price for the stock is 700. Our target multiple is 41 times FY25E EPS, which is 1.5 SD less than the historical 2-year average P/E “the note stated.
Almost 6.6 billion dollars are in cash in Nazara, with an extra 40 million in Silicon Valley Bank. The brokerage thinks it can leverage acquisitions to increase its reach in real money gambling once regulatory certainty is achieved.
bull and bear case evaluation
Also, given its current liquidity situation, Najra can profit from inexpensive purchase opportunities. The brokerage anticipates a bull case valuation of 800 if these triggers work (for March 24).
However, the brokerage sees pricing in a bear case 400 (for March 24), indicating an upside:downside ratio of 3.7:1, which makes it an attractive buy, it said. If growth slows or margins do not improve, it is a bear case, according to the brokerage.
According to ICICI Securities, on-year revenue growth in FY24E is expected to be 37%, driven by eSports’ 45% YoY growth and GEL’s 25% YoY increase. The brokerage forecasts an 86 percent year-over-year increase in EBITDA for FY24E, driven by a 250 basis point increase in EBITDA margin as eSports IPs scale up and a profit increase for GEL due to subscriber growth and value creation.
The company’s inability to establish its gaming accessories business, which would result in lower margins, the impact of increased competition/a slowdown in US markets, the ongoing delay in RMG regulatory clarification, and the identification and integration of acquisitions are among the key risks, according to the brokerage.
Investor Rekha Jhunjhunwala controls 65,88,620 shares, or around 10% of the tech company, as of December 2022, according to the most available BSE holdings data.
disclaimer, The views and recommendations given above are of individual analysts or broking companies and not of o2help,
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