Nazara Technologies Ltd shares rallied sharply in Monday’s deals to touch their one-year high level. The stock jumped 10.53 per cent to hit a 52-week high of Rs 839.15. This comes after the company board approved to issue shares worth Rs 100 crore to Zerodha’s founders Nikhil and Nithin Kamath.
“We wish to inform you that the board … considered and approved Issuance of up to 14,00,560 shares of the company, for cash, at an issue price of Rs 714 per Equity Share aggregating to an amount of Rs 99,99,99,840 to M/s Kamath Associates (Partnership firm represented by its partners Nikhil Kamath and Nithin Kamath) and M/s NKSquared (Partnership firm represented by its partners Nikhil Kamath and Nithin Kamath),” the company said in a regulatory filing.
“As per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements), Regulations, 2018, these equity shares will be locked in for a period of six months from the date of issue. This infusion of fresh funds will be utilized to invest in funding requirements and growth objectives of the company including for making strategic acquisitions and investments in various companies/body corporates/entities, meeting growth and funding requirements based on the business opportunities across the subsidiaries/associates/joint venture of the company, as applicable, through investment in subsidiaries/associates/joint venture of the company," it further stated.
In an exclusive interaction with CNBC-TV18 post the announcement, Zerodha Co-Founder Nikhil Kamath said that he will look to increase his stake in Nazara further. Currently, the combined stake has increased from 1 per cent to around 3.5 percent, Kamath said.
The shares will be issued at Rs 714 per equity share, which is a discount of 7.3 percent from Friday’s closing price of Nazara.
Both the entities will be issued an equal number of 7,00,280 shares. Post the preferential issue of shares, the stake of both Kamath Associates and NKSquared in Nazara Technologies will go up to 1.36 per
cent each.
Kamath is betting on the growing gaming industry at a time when the Indian gaming market is expected to grow from $2.8 billion in 2022 to $5 billion in 2025, growing at a CAGR of 28-30 percent.
According to the World Economic Forum (WEF), mobile devices are the primary drivers of India’s gaming industry. Affordable internet and the availability of faster smartphones with enhanced gaming capabilities have also fuelled the market.
The number of gamers in the country is expected to expand from 420 million in 2022 to hit 500 million by 2025.
Nazara is a gaming and sports company with presence in India, US and other global markets.
Nazara Technologies Technical Outlook
On technical setup, the counter was last seen trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter’s 14-day relative strength index (RSI) came at 76.76. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a negative price-to-equity (P/E) ratio of 219.67 against a negative price-to-book (P/B) value of 5.49.
The scrip has an analyst target price of Rs 779, Trendlyne data showed, suggesting a potential downside of 7 per cent. It has a one-year beta of 1.02, indicating average volatility on the counter.
