Rakesh Jhunjhunwala Stock Falls 57% in 2022 So Far; Analysts Say Valuations Rich; Check Target Price

Rakesh Jhunjhunwala Portfolio: Nazara Technologies rallied nearly 6 per cent to Rs 1,055.40 apiece on BSE on Thursday, after the gaming stock hit a fresh all-time low of Rs 998.05 in the previous session. The brokerage said the company is a jack of many games but master of one, as barring eSports, Nazara is not a dominant player in any of the other segments.

Stock Price History

The stock rose to a lifetime high of Rs 3,356 apiece in October last year; however, since then this Jhunjhunwala stock has corrected more than 68 per cent. Year-to-date (YTD), Nazara Tech stock has shed over 57 per cent in price. Domestic research and brokerage firm JM Financial Services has initiated coverage on Nazara Technologies, saying valuation is ‘rich’.

JM FInancial’s target a potential 4 per cent upside on the counter. JM Financial has recommended to hold the stock as it believes that in the near-term, eSports will continue to drive this gaming stock’s growth, aided by recent acquisitions. eSports is Nazara’s largest (49 per cent revenue share, FY22) and fastest-growing segment. Nodwin, Nazara’s eSports subsidiary, has an 80 per cent market share in India’s nascent (USD 100mn) but fast-growing eSports market. Nazara’s partnership with global eSports platforms, game publishers, and brands positions it uniquely to lead eSport penetration in India, JM Financial said.

“Any potential adverse regulation on real-money gaming (RMG) would not only reduce competitive intensity but also increase scarcity value for Nazara – this would make us more constructive on the business’ outlook and on the stock,” it said.

On the positive side, JM Financial said Nazara, has morphed into a diversified gaming company with presence across eSports, gamified learning, simulation as well as real money games.

This has given it a toehold across India’s $1.8 billion online gaming market, the brokerage said, adding Nazara’s prudent capital allocation strategy has meant that this opportunity has come at a reasonable cost.

“Besides, unlike other gaming platforms, Nazara’s disjointed gaming assets limit its ability to broaden its acquisition funnel and maximise gamers’ wallet share, in our view,” it said.

Nazara Tech Fixes Record Date

The board of Nazara Technologies has fixed June 27, 2022, as the record date for the proposed bonus issue of shares. The company’s board approved a bonus of one share against each share held by the shareholders.

“It is hereby informed that the Board of Directors of the Company has fixed Monday, June 27, 2022, as the Record Date, for the purpose of ascertaining the eligibility of shareholders for issuance of Bonus Equity Shares of the Company in the proportion of one new fully paid-up equity shares of Rs 4 each for every one fully paid-up an existing equity share of Rs 4 each held,” Nazara Tech informed in an exchange filing last week. Bonus shares are fully paid additional shares issued by a company to its existing shareholders.

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