Nazara Introduction :
A block deal involving 48.84 lakh shares of Nazara Technologies, representing a 6.38 percent stake, occurred on May 27. Promoter Mitter Infotech sold the shares to Plutus Wealth Management, a pre-IPO investor since 2020.
Impact of the Deal and Share Price Surge :
Following the block deal, Nazara Technologies experienced a significant share price increase. The gaming company’s shares surged by 4.5 percent, marking the most substantial jump in 19 weeks, and reached a 52-week high of Rs 642 on the NSE. This boost in share price reflects the market’s positive reception of Plutus Wealth Management’s increased stake, as Plutus has been a committed investor in Nazara since before its IPO and has consistently participated in subsequent fundraising rounds.
Stake Details and Future Sale Plans :
With the completion of this block deal, Mitter Infotech’s stake in Nazara Technologies now stands at over 10 percent. The promoters have clarified that there are no plans to sell additional shares in the near future. The primary motivation behind the stake sale was to provide liquidity to the promoters, ensuring they have the necessary resources while maintaining a significant interest in the company.
Strategic Growth and Expansion Plans :
Vinay Rajani of Nazara Technologies shared insights into the company’s strategic plans during an interaction with CNBC-TV18. He highlighted that the real money gaming segment has the potential to grow substantially, potentially comprising up to 30 percent of Nazara’s overall business within the next 2-3 years. This growth is contingent upon finding the right opportunities for inorganic expansion. Rajani mentioned that Nazara is already in discussions with three to four core gaming companies and plans to finalize an acquisition by FY25. This move is part of a broader strategy to diversify and strengthen the company’s market position.
Financial Performance and Future Outlook :
Despite the positive market response to the block deal, Nazara Technologies has faced some financial challenges. The company reported a net profit of Rs 18 lakh in its recent financial results, a steep decline from Rs 9.4 crore in the same period last year. This significant drop in profitability was primarily due to a loss of Rs 16.87 crore from discontinued operations, which included write-offs in several of the company’s legacy businesses, such as its real-money gaming business, Halaplay. Additionally, the company’s revenue for the quarter fell by 8 percent year-on-year, decreasing from Rs 289.3 crore to Rs 266.2 crore.
Despite these setbacks, Vinay Rajani expressed optimism about the company’s future. He expects growth to pick up from the second quarter of FY25, driven by strategic acquisitions and organic growth initiatives. Rajani also anticipates a 100 basis points margin expansion in FY25, reflecting improved operational efficiencies and a more robust revenue mix. Nazara’s focus on scaling its real money gaming segment and exploring new growth avenues is expected to drive its financial performance in the coming years.