At a Glance
Nazara Technologies has vaulted from ₹454 Cr in sales in FY21 to ₹1,624 Cr in FY25 (5-year CAGR: 46%), but profits peaked at ₹75 Cr in FY24 and dipped to ₹51 Cr in FY25 (5-year profit CAGR: 97%). ROCE/ROE languish near 3%, while the stock trades at an eye-watering 187× trailing EPS of ₹8.60. KMP include Manish Agarwal (CEO) and Deven Kataria (CFO).
1. Introduction with Hook
- Remember when gaming was “just for kids”? Nazara is proving it’s serious business, raking in over ₹1,600 Cr in FY25 and commanding a P/E of 187×.
- But behind the fantasy-adventure IPs lies a profit story that peaked too soon and margins that could use a power-up.
- Let’s load the next level: is Nazara on track to become an esports behemoth or just another flash-in-the-pan mobile title?
2. Business Model (WTF Do They Even Do?)
- Interactive Gaming: Owns marquee IPs like World Cricket Championship (WCC), CarromClash, and fantasy sports via Halaplay.
- eSports & Media: Nodwin organizes tournaments; Sportskeeda delivers memes-and-news feed to 50 Mn+ monthly users.
- Gamified Early Learning: Kiddopia platform targets premium kids-edtech segment.
- Skill & Trivia: Qunami and Halaplay trivia drive engagement, monetization through entry fees and ads.
- Global Footprint: India (~70% revenues), Africa, North America – diversified by geography and monetization model.
3. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Sales (₹ Cr) | 454 | 622 | 1,091 | 1,138 | 1,624 |
| Net Profit (₹ Cr) | 14 | 51 | 61 | 75 | 51 |
| OPM (%) | 9% | 14% | 9% | 9% | 7% |
| ROCE (%) | 2% | 7% | 7% | 6% | 3% |
| ROE (%) | 3% | 8% | 16% | 12% | 3% |
- Sales Surge: ₹454 Cr → ₹1,624 Cr in four years; core gaming segment grew 46% p.a.
- Profit Volatility: After a steady climb from ₹14 Cr to ₹75 Cr, FY25 saw a 32% drop in net profit to ₹51 Cr.
- Margins Under Pressure: OPM peaked at 14% in FY22 but slid to 7% in FY25, weighed down by marketing spend and content costs.
- Return Ratios: ROCE/ROE dipped sharply in FY25 due to elevated working capital and capex in early learning.
4. Valuation – Is It Cheap, Meh, or Crack?
- Current P/E: 186.8× trailing EPS of ₹8.60.
- Price/BV: 4.08× book value of ₹327.
- Fair Value Range:
- Gaming peers trade at P/E 30–40×; applying 35× FY25E EPS → FV ≈ ₹301.
- Growth premium could justify P/E 50–60× → FV ≈ ₹430–₹516.
- Rationale Transparency:
- Nazara’s 5-year profit CAGR of 97% dwarfs most peers, but recent margin softness and capex run-rate argue for P/E at the lower end of that range.
5. What’s Cooking – News, Triggers, Drama
- Open Offer Alert: Open offer at ₹990 for 26% stake—acquirer signals confidence below current market price.
- Acquisitions: Nodwin’s 92.3% buyout of AFK Gaming (INR 7.58 Cr) expands tournament portfolio.
- Investment in Getstan: USD 1 Mn for 1.54% stake—Nazara doubling down on trivia and skill-gaming.
- Concall Buzz: Expect updates on Africa expansion and monetization roadmap in Q1 FY26.
- Regulatory Watch: SEBI’s tightening of pay-to-play rules in fantasy sports could crimp revenue mix.
6. Balance Sheet – How Much Debt, How Many Dreams?
- Total Liabilities: ₹4,435 Cr vs. ₹2,753 Cr in FY24 (higher due to creditors & deferred revenue).
- Borrowings: ₹219 Cr (up from ₹28 Cr) – modest leverage but cost of funds rising.
- Reserves: ₹2,828 Cr (up 44% YoY) – retained earnings fueling capex.
- Net Debt/Equity: ~0.08× – near net-cash status, allowing aggressive M&A.
7. Cash Flow – Sab Number Game Hai
| Activity | FY24 (₹ Cr) | FY25 (₹ Cr) |
|---|---|---|
| Cash from Operations | 91 | 66 |
| Cash from Investing (capex) | –612 | –1,134 |
| Cash from Financing | +946 | +805 |
| Net Cash Flow | +425 | –264 |
- Operating Cash: Healthy but trending down; free cash generation needs margin repair.
- Investing Spree: ₹1,134 Cr in FY25—bulk for Kiddopia and global acquisitions.
- Financing Push: ₹805 Cr raised via equity and debt; dilution risk if M&A ROI lags.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| Debtor Days | 62 | 88 | 129 |
| Inventory Days | – | – | 10 |
| Payable Days | –994 | 31 | 1,092 |
| Cash Conversion Cycle | 31 | 31 | 44 |
- Debtor Days: Jump to 129 days signals weaker receivables controls.
- Payables: Negative CCC in FY23 (advance monetization), normalizing to 1,092 days in FY25 thanks to deferred revenue—accounting quirks ahead.
9. P&L Breakdown – Show Me the Money
- Revenue Mix FY25:
- Interactive Gaming: 42%
- eSports & Media: 25%
- Early Learning (Kiddopia): 18%
- Fantasy & Trivia: 15%
- Cost Structure: Marketing & sales (~30%), content licensing (~20%), employee/tech (~25%), other overheads (~25%).
10. Peer Comparison – Who Else in the Game?
| Company | CMP (₹) | P/E | Mar Cap (₹ Cr) | ROCE (%) |
|---|---|---|---|---|
| Nazara Technologies | 1,334 | 186.8 | 11,680 | 3.0 |
| 7Seas Entertainment | 71.98 | 96.8 | 161 | 12.0 |
| Bodhi Tree | 8.37 | 30.9 | 151 | 4.9 |
- Takeaway: Nazara’s valuation is 2×–6× higher than niche peers; growth story must deliver or risk reboot.
11. Miscellaneous – Shareholding, Promoters
- Promoters: 8.3% (down from 16.4% two years ago) – dilution concerns.
- FIIs: 13.5% (highest in a year) – foreign interest rising.
- DIIs: 9.8% (down from 16.8%) – mixed institutional sentiment.
- Public Float: ~68.4%.
- KMP:
- Manish Agarwal – Founder & CEO
- Deven Kataria – CFO
12. EduInvesting Verdict™
Nazara’s rise from a ₹454 Cr slugger to a ₹1,624 Cr battler in FY25 is nothing short of epic. But the profit dip, margin squeeze, working-capital balloon, and an eyebrow-raising 187× P/E make this title a high-risk, high-lyric gamble. If eSports monetization and Kiddopia traction hit turbo mode, Nazara could level up. Until then, consider the valuation boss fight still too tough to beat.
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Nazara Technologies, Gaming, eSports, Stock Analysis, EduInvesting Verdict
