Why This Nikhil Kamath-, Rekha Jhunjhunwala-Backed Small Cap Stock Is Up 4% Today

Shares of Nazara Tech surged on Friday morning going up over 4% to hit an intraday high of ₹827.50.

What Happened: The gaming tech company extended gains today as ICICI Securities maintained its “buy” call on the stock. The domestic brokerage has a price target of ₹1,080 — around 36% upside from the stock’s last closing price of ₹790.35.

The brokerage firm in its research noted said that the company has a strong cash balance. The firm noted that the company has a cash balance exceeding ₹800 crore (standalone) following a preferential allotment of around ₹510 crore. As per the firm, this financial strength enables Nazara to leverage opportunities in the real money gaming (RMG) space, particularly at a time when many platforms are facing funding constraints due to a reluctance to pass on the full 28% GST rate to end-users, fearing potential loss of market share.

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Apart from the RMG space, the firm pointed out that the revenue outlook for eSports remains robust, with a projected 39% compound annual growth rate (CAGR) from FY23-25E. This growth is expected to be driven by NODWIN Gaming (42% CAGR from FY23-25E) and Sportskeeda (27% CAGR from FY23-25E). Additionally, a positive margin outlook is anticipated, with scale efficiencies expected from Intellectual Properties (IPs) and gradual improvements in the gaming accessories business. The profitability of GEL (Nazara’s eSports subsidiary) is expected to improve through a combination of subscriber additions and price increases.

Price Action: Nazara Tech’s share price was up 3.44% to trade at ₹817.50 in the early hours of trading on Friday.

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Posted In: Analyst ColorEquitiesPrice TargetReiterationMarketsAnalyst RatingsMoversTrading IdeasICICI SecuritiesNazara TechRekha Jhunjhunwala