Hold Nazara Technologies; target of Rs 396: Prabhudas Lilladher

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Nazara Technologies' revenue increased 52.6% YoY, driven by consolidation of BlueTile and BestPlay, with gaming revenue up 121.8% YoY.
  • The company's EBITDA margin stood at 14.9%, with a PAT margin of 5.3%, aided by higher-than-expected other income and lower finance costs.
  • New leadership, including Mithun Sacheti, is focused on scaling the gaming segment and opportunistically divesting non-core businesses.
  • The stock trades at an EV/EBITDA multiple of 27x/22x over FY28E/FY29E estimates, with a SoTP-based target price of INR396.

Thesis Validation Checklist

To validate the Hold thesis, investors should watch for: sales and EBITDA growth, driven by the gaming segment; successful integration of BlueTile and BestPlay; and progress on divesting non-core businesses. Key signals include: (1) revenue growth from the gaming segment, (2) EBITDA margin expansion, and (3) updates on the divestment of non-core businesses. If these signals are positive, it could lead to a re-rating of the stock.