Mumbai-based Nazara Technologies Ltd. is launching its Rs 583-crore IPO from March 17. This is the first IPO by an Indian gaming and diversified sports platform. This is an offer for sale by selling shareholders, which means the currently loss-making but debt-free company will not get any money from IPO proceeds. Read more to know details.
What is Nazara’s business
Nazara is an India-based diversified gaming and sports media platform. It has offerings across the interactive gaming, eSports and gamified early learning ecosystems including World Cricket Championship (WCC) and CarromClash in mobile games, Kiddopia in gamified early learning, Nodwin and Sportskeeda in eSports and eSports media, and Halaplay and Qunami in skill-based fantasy and trivia games.
The company has focused on growing a profitable business, with an emphasis on self-sustainability rather than relying on external investments. It reflects in its fund-raising history, wherein we have raised Rs 12.63 crore (in two tranches in 2005 and 2007) and Rs 76.53 crore in 2018. As a result, Nazara has been historically been EBITDA positive and has generated sufficient cash flows from operations.
Nazara promoters are Vikash Mittersain and Nitish Mittersain and its CEO is Manish Agarwal. The company has highly coveted investors such as IIFL, Rakesh Jhunjhunwala and Utpal Sheth.
How about financials
The companyâ€™s monthly active user base is about 5.75 crore. In six months ended September 2020, Nazara reported revenues in 6 segments.
Gamified early learning – segment revenue of Rs 78.6 crore and negative EBITDA.
eSports – segment revenue of Rs 63.7 crore and Rs 8.09 crore EBITDA.
Telco subscription – segment revenue of Rs 42.7 crore and Rs 11.3 crore EBITDA.
Freemium – segment revenue of Rs 9 crore and Rs 2.1 crore EBITDA.
Real money gaming – segment revenue of Rs 6.3 million and Rs 58 million negative EBITDA.
Nazara EBITDA margins in the six-month period ended September 30, 2020 stood at 6.11%, as compared to 3.48% in the Financial Year 2020. Its business is growing both in terms of revenue and EBITDA margins.
The company currently derives revenues mainly from subscription fees paid by users for accessing gamified early learning content, and from eSports business.
But remember Nazara is a loss-making company. In the six months ended September 2020, it made Rs 101 million consolidated loss on revenue of Rs 2070 million.
In FY20 too, the company made a loss of Rs 266 million on a revenue of Rs 2621 million.
However, the company had made a slim net profit of Rs 67 million on revenues of Rs 1861 million in FY19.
|â‚¹4 per equity share
|â‚¹582 crore approx.
|â‚¹1100 to â‚¹1101 per equity share
What are Nazara’s valuations
We cannot value the IPO on earnings since they are negative (loss).
The IPO price targeted market cap is Rs 3352 crore. This implies a mcap/revenue ratio of over 8 times for Nazara stock.
Nazara has no listed peers.
With negative earnings, no company could be brave enough to go for an IPO. However, Nazara IPO is being done to give exit to some selling shareholders.
Key IPO details
Issue opens on March 17, 2021.
Issue closes on March 19, 2021.
Nazara share face value is Rs 4.
The IPO issue size is about Rs 583 crore.
Shares on offer are 52.94 lakh.
Minimum bid size is 13 shares.
Listing will be on BSE and NSE.
The IPO book running lead managers are ICICI Securities, IIFL Securities, Jefferies India and Nomura Financial.