nazara technologies ipo subscription status: Nazara IPO subscribed nearly 6 times on Day 2 so far

NEW DELHI: Nazara Technologies, a Rakesh Jhunjhunwala-backed mobile gaming company, saw its IPO attracting nearly 6 times bids on Day 2 of the bidding process.

The issue received bids for 1,69,98,488 shares till 11.20 am, compared with the issue size of 29,20,997 shares.

The IPO is an offer for share (OFS) of 5.29 million shares being sold in the price band of Rs 1,100 to Rs 1,101 per equity share, representing 16.7 per cent stake in the company. Ahead of its IPO, the company allotted Rs 261 crore worth shares to 43 anchor investors at Rs 1,101 per piece.

Nazara is the only company in India to have rights over IP and assets across grassroot, regional, national and international eSports. The company has market-first positions in India across sports simulation and eSports. Its eSports content business grew by 60 per cent in FY20 and has grown by nine times in the last three years.

The IPO is a play on the under-penetrated Indian gaming and global gamified early learning market, which are expected to grow at an annual pace of at 30-40 per cent over 2020-2023.

Motilal Oswal Securities likes Nazara given its leadership in highly under-penetrated mobile gaming, wide product portfolio and strong relationship and network. Analysts said Nazara is expected to witness strong growth for next 2-3 years given its recent acquisitions and first mover advantage.

“The issue is valued at 5.5 times FY21 P/BV and 7.6 times FY21 EV/Sales on an annualised and post issue basis. The issue is first of its kind listing and has no peer comparison in India. We believe that the market would like to give premium valuation to emerging growth stories like mobile gaming,” Motilal said.

At the upper limit of the price band, the issue would garner Rs 582.91 crore from investors.

Antique Stock Broking said that its a first of its kind company getting listed in India and could command a significant premium given high expected growth rates, lack of opportunities in space.

Choice Broking is executing Nazara’s topline to rise 33.8 per cent annually to Rs 593 crore in FY20-23, based on conservative estimates, over FY20-23. It is expecting Ebitda to expand 11 percentage points to 8.8 per cent (from -2.2 per cent in FY20) and PAT margin to expand 3 percentage points to 2.6 per cent (also negative in FY20) in FY23.

“At a higher price band of Rs 1,101, Nazara is demanding an EV/Sales multiple of 12.8 times its FY20 sales. However, if we annualise the H1 sales, the demanded valuation comes out to be 8.4 times, which is attractive considering the prevailing valuation of internet technological companies in India. Thus, considering the nascent stage of the domestic gaming market and the dominant position of the Nazara in key growth segments, we assign a “SUBSCRIBE” rating for the issue,” Choice Broking said.



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