Nazara Techno IPO review (Apply at your own risk)

Review By Dilip Davda on Mar 13, 2021

  •  NTL is a diversified gaming and sports media platform developer.
  •  It last paid a dividend of 1510% for FY18.
  •  The company is in the red since FY20 and thus issue is priced at a negative P/E.
  •  Investment by RKJ has created hype for this IPO.
  •  Risk savvy, cash surplus investors may consider parking funds at their own risks.

    ABOUT COMPANY:
    Nazara Technologies Ltd. (NTL) is a leading India based diversified gaming and sports media platform with a presence in India and across emerging and developed global markets such as Africa and North America. It offers across the interactive gaming, eSports and gamified earl learning ecosystems including World Cricket Championship (WCC) and CarromClash in mobile games, Kiddopia in gamified early learning. Nodwin and Sportskeeda in eSports and eSports media, and Halaplay and Quanami in skill-based fantasy and trivia games.

    NTL's goal is to cater to billion-plus mobile internet players across emerging markets who have embraced social multiplayer interactive gamming as the foremost form of entertainment. It has focused on growing profitable business, with an emphasis on self-sustainability rather than relying on external investments. It claims to be historically been EBITDA positive and has generated sufficient cash flows from its operations. Due to this its cash and bank balances as of September 30, 2020, were in the region of Rs. 184.28 cr.

    ISSUE DETAILS/CAPITAL HISTORY:
    To avail listing benefits and provide an exit to a few current stakeholders, NTL is coming out with its maiden IPO with a vanilla secondary offer. The company is issuing 5294392 equity shares of Rs. 4 each with a price band of Rs. 1100.00 - Rs. 1101.00 and mulls mobilizing Rs. 582.91 cr., (at the upper price band).  The Minimum application is to be made for 13 shares and in multiples thereon, thereafter.  

    The issue opens for subscription on March 17, 2021, and will close on March 19, 2021. The issue constitutes 17.39% of the post issue paid-up capital of the company. The company has kept shares worth Rs. 2 cr. For eligible employees and offering them a discount of Rs. 110 per share. From the residual portion, lit has made an allocation of IPO quota - 75% for QIBs, 15% for HNIs and 10% for Retail investors.

    Having issued initial equity at par, NTL issued further equity in the price range of Rs. 30.33 to Rs. 2733.50 per share (based on FV of Rs. 4 per share) between April 2000 and March 2021.

    It has also issued bonus shares in the ratio of 4 for 1 in January 2018. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. Nil, Rs.0.80, Rs. 413.59, Rs. 554.54, Rs. 554.62, Rs. 554.65, Rs. 554.81, Rs.556.90, Rs. 728.00 and Rs. 730.95 per share.

    NTL's current paid-up equity capital of Rs. 12.18 cr. will remain the same following this being complete OFS. Based on the upper price band of the issue, the company is looking for a market cap of Rs. 3352.86 cr.

    Book Running Lead Managers for this issue are ICICI Securities Ltd., IIFL Securities Ltd., Jefferies India Pvt. Ltd., and Nomura Financial Advisory and Securities India Pvt. Ltd., while Link Intime India Pvt. Ltd. is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE.

    FINANCIAL PERFORMANCE:
    On the financial performance front, for the last three fiscals, NTL has (on a standalone basis) posted total turnover/net profits - (loss) of Rs. 181.94 cr. / Rs. 1.02 cr. (FY18), Rs. 186.10 cr. / Rs. 6.71 cr. (FY19) and Rs. 262.15 cr. / Rs. - (26.62) cr. (FY20). For the first six months of FY21 ended on September 30, 2020, it has posted a loss of Rs. - (10.11) cr. on a turnover of Rs. 207.01 cr.

    For the last three fiscals, NTL has posted an average EPS of Rs. 1.88 and an average RoNW of 1.30%. The issue is priced at a P/BV of 6.54 based on its NAV of Rs. 168.47 per share as of September 30, 2020.

    Based on FY20 and 6M-FY21 negative earnings, the issue is at a negative P/E.

    COMPARISION WITH LISTED PEERS:
    As per offer documents, NTL has no listed peers to compare with.

    DIVIDEND POLICY:
    The company has last paid a dividend of 1510% for FY18 and thereafter it has skipped it till going for IPO. It will consider a prudent dividend policy based on its performance and future prospects going forward.

    BRLM'S TRACK RECORDS:
    The four Book Running Lead Managers associated with the offer have handled 29 public offers in the past three years, out of which 10 issues closed below the offer price on the listing date.


Conclusion / Investment Strategy

With negative earnings for the past 18 months, the issue is being offered at a negative P/E. Simply due to investment by big tycoon RKJ, this IPO is creating hype. Being the first mover, it might catch fancy post listing, but the offer price is very aggressive based on its financial data. Hence cash surplus, risk savvy investors may consider investment at their own risks.

Review By Dilip Davda on Mar 13, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Nazara Technologies IPO FAQs

  1. 1. Why Nazara Technologies IPO?

    The initial public offer (IPO) of Nazara Technologies Limited offers an early investment opportunity in Nazara Technologies Limited. A stock market investor can buy Nazara Technologies IPO shares by applying in IPO before Nazara Technologies Limited shares get listed at the stock exchanges. An investor could invest in Nazara Technologies IPO for short term listing gain or a long term.

  2. 3. Nazara Technologies IPO what should investors do?

    Nazara Technologies IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Nazara Technologies IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  3. 4. Is Nazara Technologies IPO good?

    Sorry, we didn't rate the Nazara Technologies IPO.

  4. 5. Is Nazara Technologies IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Nazara Technologies IPO.

  5. 6. When will Nazara Technologies IPO allotment status?

    The Nazara Technologies IPO allotment status will be available on or around Mar 24, 2021. The allotted shares will be credited in demat account by Mar 26, 2021. Visit Nazara Technologies IPO allotment status to check.

  6. 7. When will Nazara Technologies IPO list?

    The Nazara Technologies IPO will list on Tuesday, March 30, 2021, at BSE, NSE.








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