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ICICI Securities Report
Nazara Technologies Ltd.'s Q1 FY24 revenue was below estimates due to-
deferment of key eSports launches to H2 CY23 and
decline in Adtech's growth due to client rationalisation.
However, Ebitda margin expansion (+340 basis points QoQ) materialised in Q1 FY24 broadly in line with our estimates. Kiddopia's Ebitda margin expanded ~960 bps QoQ led by ~19% reduction in marketing spends.
There was a technical issue (now resolved) with their attribution partner which resulted in cost per trial increasing to $39.3 (to revert to earlier band of $34-36 from Q2). We believe CPT jump and subsequent marketing spend pullback caused 3.2% QoQ decline in Kiddopia subscribers in Q1.
Animal Jam ramp up is now materialising (Ebitda margin of 22.5% in Q1 FY24).
Management has guided for revenue and margin acceleration in coming quarters as some mature gaming IPs start coming from Q2 FY24.
We look forward to more clarity on margin improvements in key business segments and their sustainability in the near term from earnings call due today. We re-iterate 'Buy' on the stock with a target price of Rs 850.
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