B&K Securities has initiated coverage on Nazara Technologies Ltd. with a ‘buy', saying its market leadership across verticals shall enable robust revenue growth over the next decade as gaming ecosystem continues to evolve.
The Rakesh Jhunjhunwala-backed online gaming platform offers exposure to five verticals, of which three—eSports, gamified early learning and real money gaming—are fast-growing with an annualized rate of more than 25% over three-five years, the research house said in a Dec. 30 note. “These categories are spread across age groups 2-30 and incorporate both serious and casual gamers. This ecosystem, though relatively nascent, is at an inflection point.”
B&K Securities has set price target at Rs 3,287 apiece using sum-of-the-parts valuation approach. This implies a potential upside of 42.58% from Thursday's close. Shares of the company swung in intraday trade from gaining as much as 1.89% to fall 1% as of 1 p.m. on Friday.
Nazara's eSports vertical accounts for 65% of the brokerage's target price. “The strength of the eSports business and its absolute leadership position allows ascribing rich valuations, further supported by exponential growth.”
Of the eight analysts tracking the company, six recommend a ‘buy' and two suggest a ‘sell', according to Bloomberg data. The overall consensus 12-month price target implies an upside of 14.5%.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
