Prabhudas Lilladher has given Buy recommendation for Nazara Technologies with a target price of Rs. 1031 in its research report issued on Sep 01, 2022

Prabhudas Lilladher’s research report on Nazara Technologies

We increase our sales estimates by 5%/10% for FY23E/FY24E respectively as we incorporate acquisition of WildWorks (consolidation impact will be for 7 months in FY23E), an interactive edutainment company based out of the US. Nazara was eyeing to expand beyond the 2-7 age group category where Kiddopia has presence and WildWorks’ acquisition has helped plug this gap (target market is 8-12 years). Further, this acquisition has also re-ignited growth prospects of GEL segment as induction into the “Friends of Nazara network” would transform WildWorks as learnings from Kiddopia can be harnessed while DataWrkz’ expertise can also be utilized to optimize CAC. Further, acquisition spends are also expected to rise from here on driving subscriber growth (93,916 as of 2QCY22).

Outlook

Overall, we expect sales/PAT CAGR of 46%/77% over FY22-24E and believe Nazara’s portfolio approach to gaming not only diversifies unforeseen risks (Apple’s privacy policy issue or regulatory uncertainty surrounding RMG) but also creates additional growth levers via inorganic route. Retain BUY with a DCF based TP of Rs1,031.

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