Nikhil Kamath-Backed Nazara Hits 52-Week High: Why Analyst Sees Another 60% Upside

Shares of Nazara Tech continued to hit new 52-week highs at the bourses on Tuesday even as major brokerages remained bearish on the stock.

Jefferies maintained its “hold” call while CLSA maintained its “sell” call on the stock. However, analysts at ICICI Securities think the gaming company is a “compelling buy”.

The Nazara Tech Analyst: The Abhisek Banerjee-led analyst team at ICICI Securities maintained its “buy” rating for the stock with a price target of ₹1,080. The target indicates an around 61% upside from the stock’s last closing price of ₹672.55.

The Nazara Tech Thesis: The brokerage firm highlighted that the Nikhil Kamath-backed company’s consolidated revenue for the March quarter was at ₹266.2 crore, reflecting an 8% year-on-year decline and a 16.9% quarter-on-quarter decrease.

Consolidated EBITDA rose by 5.5% year-on-year to about ₹29.2 crore, with a margin of 11.0%, slightly above ICICI Securities’ estimate of 10.%. The profit after tax from continuing operations was ₹17 crore, a 43% increase year-on-year.

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The analysts pointed out that both Sportskeeda and PFN continued to scale rapidly, achieving 67% year-on-year growth with a healthy EBITDA margin of 26.5%. However, Kiddopia’s growth remained underwhelming, with a 6.5% quarter-on-quarter decline in subscribers despite sequential improvement in cost-per-thousand-impressions (CPT), the brokerage said. Management is actively exploring alternative growth opportunities for Kiddopia to address this issue, the analysts added.

The brokerage added that at current valuations the stock is a compelling buy but a few risks to the company are increased competition or slowdown in the U.S. markets and inability to identify and integrate acquisitions.

Price Action: Nazara Tech’s share price was up 4.29% to trade at ₹701.40 shortly after market open on Tuesday.

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