Mobile gaming company, Nazara Technologies is expected to see a bumper listing on March 30 despite high market volatility on the back of a successful business model, high growth trajectory, pioneer status in the gaming field and a backing from Rakesh Jhunjhunwala, experts feel.
Its shares traded at a massive 50-59 percent premium in the grey market during the weekend. Last week, the premium was 67-68 percent.
At a grey market premium of Rs 550-650 per share, the trading price comes to Rs 1,651-1,751 against the issue price of Rs 1,101, the IPO Watch, IPO Guru and IPO Central data showed.
“The company has been on a high growth trajectory for the past few years which is expected to continue going forward. We, therefore, believe that the grey market premium is justified by the high growth potential of the company, though at the current grey market levels, it is commanding a multiple of 5.5xFY23 EV/Sales which is not cheap by any means,” Jyoti Roy, DVP- Equity Strategist at Angel Broking told Moneycontrol.
Nazara Technologies is present in the fast-growing segment of interactive gaming, eSports and gamified early learning solutions and is one of the best play on the internet sector. The company owns properties like World Cricket Championship (WCC) and CarromClash in mobile games, Kiddopia in gamified early learning, Nodwin and Sportskeeda in eSports and eSports media, Halaplay and Qunami in skill-based, fantasy and trivia games.
After posting a degrowth of 1.4 percent in FY19, the company posted a strong revenue growth of 45.9 percent in FY20 at Rs 247.5 crore. The company has already posted revenues of Rs 200 crore in H1FY21.
Experts believe Nazara Technologies could debut with 50-67 percent premium on the bourses on March 29.
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“We expect Nazara to list at a 50 percent premium to issue price,” said Astha Jain, Senior Research Analyst at Hem Securities.
Nazara Technologies IPO received a tremendous response from the street with subscription of 175.46 times. “The IPO has attracted a great deal of investors’ attention as this is a technology company mainly operating in mobile games area and also because of the fact that it is backed by Rakesh Jhunjhunwala seems to have provided it some creditability,” Gaurav Garg, Head of Research at CapitalVia Global Research said.
“The strong financials and the space it operate in has managed to create a buzz on the street and investors who are not allotted the shares seem eager to acquire it from the secondary market. With issue price of around Rs 1,100-1,101 per share the listing price is expected to be in the range of 1,820-1,835,” he added.
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