PL First Cut – Nazara Technologies Ltd | 2QFY24

PL First Cut – Nazara Technologies Ltd | 2QFY24 – Jinesh Joshi – Research Analyst, Prabhudas Lilladher Pvt Ltd

Nazara Technologies Ltd | 2QFY24 First Cut | Tax write back drives PAT beat | HOLD | TP Rs836|

✳️Revenue increased 12.7% YoY to Rs2,972mn (PLe Rs3,148mn). E-sports revenue was up 25.9% YoY to Rs1,720mn (PLe Rs1,804mn). Ad-Tech revenues were down 36.5% YoY to Rs225mn (PLe Rs249mn) while gaming revenue was up 13.8% to Rs1,043mn (PLe Rs1,096mn).

✳️Gaming/Esports segment reported EBIT of Rs141mn/Rs44mn respectively while Ad-Tech business reported EBIT loss of Rs27mn.

✳️EBITDA increased 30.9% YoY to Rs279mn (PLe Rs261mn) with a margin of 9.4% (PLe of 8.3%) vis-a-vis 8.1% in 2QFY23.

✳️PAT after MI stood at Rs181mn (PLe Rs106mn) with a margin of 6.1% (PLe of 3.4%) vs a margin of 3.9% in 2QFY23. Profitability divergence was due to tax credit arising from demerging of the fantasy sports business of Halaplay into OpenPlay. In all, there was a tax write back of Rs13mn (PLe tax outgo of Rs47mn) resulting in PAT beat.

✳️Nazara trades at EV/Sales multiple of 3.7x/3.1x our FY24E/FY25E sales estimates and currently we have a HOLD rating on the stock.