ValuePickr Forum

Nazara Technologies

Yes Securities sees long term Uncertainty in the business with mainly concerns on Moat sustaining & low barriers to entry …compared it with Shemaroo Entertainment …Some food for thought ! BUT

Nazara expected to benefit from Strong Industry growth over the next 3 yrs … :point_down:

Nazara-Technologies-13-09-2021-yes.pdf (635.0 KB)

The CEO provided some more context about real money gaming.

In the above interview, the CEO shared his vision and also reiterated the company’s strategy

So if you see Nazara’s teleco business which we have been doing for 15 years, it is almost now 13-14% of the overall portfolio and our IPs which we have acquired and grown over last three-four years like kiddopia, Nodwins, Sportskeeda, the World Cricket Championship; they are all growing so. If you look at our strategy, it has been to build all the friends of Nazara as a concept and then continue to build value with those founders at subsidiary levels.

The acquisition spree continues in Nazara - Majority stake in 3 companies so far after listing. Note that Publishme is a company based out of middle east.

One of the key benefits of listing is , it improves credibility of the company as the listed company has to operate under the purview of market regulator like SEBI who plays the role of watchdog. Nazara’s strategy is inorganic growth and the listing certainly helps to expand friends of Nazara at a brisk pace.

The world over is looking towards sharing model wherever possible for optimum utilisation of available resources - Airbnb or cloud providers like AWS, Azure, GCP. Nazara is actually playing a similar game.

  1. Identify and acquire majority stake in companies which are having more probability of success
  2. Share the tips/tricks to scale up - I am not sure whether they charge some fee here
  3. In the future, once it becomes significantly large, it will look for benefits of scaling - it can be at infrastructure level(Common Physical location/IT/Storage etc) or Better contracts with Sponsors(Nodwin) or Packaged Ad revenue(WCC3/Kiddopia etc)

WCC3(Game owned by Subsidiary of Nazara) recently got first in-game integration with Axe-Deodrant(Hindustan Unilever)

Axe understands that a good portion of their target customers(young male) are interested in cricket & gaming in India and WCC3 is specifically catering to that segment with enhanced features. Similar types of in-game integrations can be expected in many mobile games in the future, for the simple reason that mobile is omnipresent & games can get you glued for a longer duration. The brands always look for the marketing channels where they can find customers.

Aside, look at this trend of virtual humans - Meet Rozy Oh who has bagged more than 100 advertisements so far and always remains a 22 years old. Can Nazara make any virtual human( Chota Bheem etc) like this? I don’t know. It is too far to even think on that front.

So far, the narrative is going great with the growing acceptance of e-sports(recent addition in Asian games) and introduction to in-game integration with brands(Axe). For the numbers, we need to wait for quarterly results.

Discl - Invested 3% of Portfolio.

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Nazara Tech’s board today approves a preferential allotment of fresh equity to raise INR 315.30 Crores from marquee institutional investors subject to the approval of the shareholders of the Company and such regulatory / statutory authorities as may be applicable.

The Company will issue 1,429,266 equity shares of face value of Rs. 4/- each at a price of Rs. 2,206/- per equity share (including a premium of Rs.2,202/- per equity share). As per SEBI ICDR Guidelines, these shares will be locked in for a period of 1 year from the date of issue.

This infusion of fresh funds will be utilized to invest in growth initiatives of the company as well as pursue strategic acquisitions in the various business verticals of the company including gamified learning, freemium, skill based real money gaming and esports as the company continues to expand its “Friends of Nazara” ecosystem.

Says Nazara Technologies Ltd., CEO, Manish Agarwal, “We are thankful to our investors for their strong endorsement of Nazara’s strategic vision and ability to execute towards its stated goals. The investment from such institutional investors will act as a catalyst for the Nazara flywheel to operate faster across all business segments and will result in compounding of the shareholder value organically and inorganically at parent as well as at subsidiary levels.”

The “Friends of Nazara” network comprises of established gaming companies in which Nazara holds majority stakes and works actively with existing founders and management teams to rapidly achieve scale. These companies include Nodwin Gaming and Sportskeeda in esports, Next Wave Multimedia (developer of World Cricket Championship (WCC), the largest mobile-based cricket simulation game), Paper Boat Apps (developers of popular gamified early learning app Kiddopia) and Halaplay and Openplay in the skill based real money gaming vertical.


Am a bit surprised that they are planning to raise again so soon after IPO. Did not seem to be a cash hungry, capital intensive business like say old economy businesses like telecom, mining, hotels etc.

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Not surprised. Lot depends on the genre of games. Some have thin margins. And given that games start dying after an year or two, cashflows are not guaranteed. Its very competitive out there. You need a solid base framework in atleast one genre and core team to easily plug in new games, which takes time, or play the acquisition game.

Disc- Not invested & not actively tracking

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Be ready to hear these news frequently. This business model require frequent inorganic growth. Typical trait of online gaming industry. Also the shelf life of games are short but high ROE hence such acquisitions and in house innovation keeps such companies relevant in Market as target customer are looking for “relevance” for early adoption then growth.


How high are barriers to entry for this space? the way I understand you would need gaming industry acumen but more importantly deep pockets to constantly acquire the ‘next big thing’.
If tomorrow big Indian corporations, MNCs were to be competitors for Nazara, assuming capable management, would that mean end of the road for Nazara? Since the winner takes it all in this kind of industry…

The only positive I see it that Nazara has a the first mover advantage at present, not sure how that will play out in face of competition

Would love to get thoughts from forum members.


I agree with your assessment, it is a highly disruptive space and acquistions is part of strategy. Nazara is also on acquiring spree and if a giant emerge in India, Nazara itself may get acquired. Maybe Reliance is watching this space looking at their recent acquisitions in consumer space.

Seems good Q2 Results. Q2 Fy 2021_22 Nazara Results 29th Oct 2021.pdf (5.5 MB)
Q2 Fy 2021_22 Nazara PR 29th Oct 2021.pdf (877.2 KB)

My takeaway is guidance - 35 to 40% revenue which is 30% in H1 hence revenue will increase in next two Qtr. EBIDTA which is 19% will be in the range of 13-15%.

Your view @GARP_niveshak. Also is there any updates on conf call?! or recording?

Results are way below my expectations. Growth has slowed down. Management has given some explanation in the investor presentation but I am not convinced.Only silver lining Is that subscriber base in Kiddopia has resumed its uptrend. I ll attend the concall on Monday at 9 AM and share my views.


Things i ll be monitoring in the near term-
Kiddopia subscriber addition vs customer acquisition cost. After the Apple privacy update they are finding it difficult to get new subscribers at similar cost. company is still experimenting with different channels to attain subscribers so It will be important to see how much they spend on subscriber addition in the next quarter.
Scale up of OpenPlay platform. They were growing very fast before nazara acquired them and maybe now they can grow faster but Cracking the Real money gaming space is going to be very tough as they get bigger. Good thing is I don’t think the market expects them to. I see this fantasy sports segment as an optionality. If it works then great else they ll move on to the next thing
Freemium segment. this is just 5% of revenues but this segment doesn’t seem to be doing that well . IAP conversion rate for WCC has been range bound over the last one year.Topline growth this quarter was unimpressive but as per management that’s due to lack of cricket matches in q2
*esports is the only thing that i can’t complain about.

Let’s see if they can deliver on their Guidance of 35-40% revenue growth. The problem with high growth companies is that one has to deal with very sharp falls in price when growth is questioned.

Disc: Invested


Fantastic write up. I had 2 questions:

  1. E-Sports seems a very fast growing segment with Nodwin being the leader. What stops other deep pocketed players (Jio for eg) create their own IP? Wouldn’t the gaming platforms want to have as many large tournaments as possible and it would be presumably easy to attract the gamers with large prize pools. What’s the moat here? Management has mentioned that in China there are only 2-3 players dominating E-Sports. Why should this be the case?

  2. Kiddopia economics: LTV of $44 and CAC of $30. Ratio of ~1.5. Isn’t this horrible? What would cause the LTV-CAC ratio to increase to ~3 which is where the economics really become compelling to try and start acquiring users.

Just after raising funds in the IPO, they raised another round and then to claim it not a very capital hungry business seems to be confusing and contradictory. Important to watch what they do, rather than what they say.


Here is the write-up based on the results and concall updates.
I did not include Telco as it seems to be less sought after vertical.

Overall Company Updates –

  1. The top priorities
  • At operating level, more subscribers to Kiddopia
  • At group level, fill white spaces in Gamified early learning, Esports, Freemium and Real Money Gaming to expand
  • Find velocity in freemium category as it is huge market and also keeping unit economics in mind
  1. Benefits of listing
  • Helps in attracting like-minded founders with liquidity
  • Demonstrate the value for the founders how they can achieve better by joining ‘Friends of Nazara’ Vs directly on their own
  1. Guidance for FY22
  • Revenue growth 35-40% YoY. 4542 m(FY21) Vs 6132m(FY22E)
  • EBITDA growth 13-15% YoY. 452 m(FY21) Vs 511m(FY22E)
  • Estimates for FY22 say that the current market cap is 140x EBITDA FY22E, 11x Sales FY22E
FY22E H1FY22 H2FY22E H1FY21 H2FY1
6131.7 2608 3523.7 2005 2537
510.76 496 14.76 62 390
  • Reasons for giving more revenue guidance in H2
    • Seasonal for Nodwin due to holiday season etc
    • Increase in Ad spend for Kiddopia, resulting in increase of revenue guidance
    • Consolidation play as new acquisitions will start contributing – OML, Open play & Publish Me

Overall, I felt the management is honest and have clarity on what they are doing. They are not looking at mindless growth but firm focus on positive EBITDA margins. The CEO has sold 13% of his shares during Sep-21 quarter. With already less promoter holding, further selling can be seen as a negative by the market.

Discl - Invested

  1. In the investor presentation, they provided the below information as moat.

Disruption can happen when deep pockets enter. However, Nodwin itself is creating the market here as it is very nascent. The foray of more players will only makes the games and tournaments popular which will also help in expanding market. In a sunrise sector, usually there will be many players and only during the consolidation phase, it will be limited to 2-3 dominant players. India is having a lag of at least 7-8 years compared with China and it must have entered consolidation phase.

  1. I think we need to look at LTV/CAC also in conjunction with the segment they are operating in. Kiddopia is operating in 2-7 year age group and based on the below information, they were able to convert 71% of trails to sales.They are trying to fit their Ad spend in such a way to attain EBITDA margins of 6-8%. In case, they reduce the Ad spend, the EBITDA margins grow up like in this quarter. I assume reducing Ad spend will increase LTV/CAC. However, for the longer term, you need to increase sales and based on the concall, they are comfortable to have CAC to be around 26 to 28$. They are sticking to the existing subscription fee and so LTV also will not change.


@sougataG - There are two things at play here. At the operating level(existing businesses), they are trying to proceed with positive EBITDA margin businesses. The statement that they are not capital hungry business relates to this part of business. Like, they don’t want to use the proceeds from the fund raised from marquee investors in the operating part. There is the second part which is at the group level. They want to acquire like minded founders so that they can expand ‘Friends of Nazara’. This is the reason why raised the fund. Many times, the founders of the games would like to have cash + equity stake and the amount raised will be used as war chest to acquire stake in like-minded company. Kiddopia was acquired with cash + equity stake.

Consider the case of Kiddopia before joining Nazara Vs After.

Discl - Invested & Biased


I am not clear. If they have the funds raised from the IPO why do they need to raise another round? Are the IPO proceeds tied up and cannot be deployed, which required them to raise another round.