Nazara Technologies has emerged as a leading player in the gaming and ad-tech sectors, consistently outperforming expectations. Prabhudas Lilladher, a renowned research house, has reiterated its BUY recommendation for Nazara Technologies, setting a target price (TP) of Rs 1,117, indicating a significant upside from the current market price of Rs 921.

Revenue Growth: The company reported a stellar 66.9% YoY increase in revenue, reaching Rs 5,347 million, significantly surpassing estimates.

EBITDA and Margins: EBITDA grew 38.9% YoY, touching Rs 524 million, with a margin of 9.8%. While this fell short of the projected 11.8%, the decline was primarily attributed to losses in Nodwin and a weaker-than-expected performance in ad-tech.

Business Strategy:

Ad-Tech Expansion: The adoption of a new revenue recognition policy for Space & Time significantly impacted financial results.

E-Sports Growth: Revenue from e-sports increased 20.1% YoY to Rs 2,327 million, demonstrating the segment’s resilience.

Gaming Portfolio Expansion: With partnerships involving brands like Little Angel, Barbie, Slinky, and Big Boss, Nazara is reinforcing its presence in the gaming and entertainment sectors.

M&A Activity: The company is actively expanding in the physical entertainment segment, acquiring Funky Monkeys and aiming to integrate SMAASH into its portfolio.

Revenue Breakdown:

Gaming Revenue: Up 52.7% YoY, reaching Rs 1,549 million.

Ad-Tech Revenue: Surged 466.6% YoY to Rs 1,479 million, highlighting the successful transition in revenue recognition.

EBITDA Margin Forecast: Expected to improve from 10.1% in FY25E to 13.7% in FY27E.

Net Profit Growth: Adjusted PAT surged 72.4% YoY to Rs 460 million, with a PAT margin of 8.6%.

Sales CAGR of 23% expected over the next two years.

Targeting EBITDA of Rs 3 billion by FY27.

EPS growth projection: Rs 17.2 in FY26E, Rs 21.0 in FY27E.

Prabhudas Lilladher has maintained its BUY recommendation with an SoTP-based valuation methodology, setting a target price of Rs 1,117.

Support Levels: Rs 880, Rs 850

Resistance Levels: Rs 970, Rs 1,050

Breakout Target: Rs 1,117 (Based on research report projections)

Nazara Technologies’ aggressive expansion strategy, strong revenue growth, and diversified business model make it a compelling investment opportunity. Investors with a medium-to-long-term horizon may consider accumulating this stock, leveraging the strong earnings trajectory and robust future potential.

Fluctuations in Ad-Tech revenue due to changes in client agreements.

Execution risks in newly acquired businesses.

Macroeconomic uncertainties impacting discretionary spending in gaming.

With an expanding footprint in e-sports, ad-tech, and entertainment, Nazara Technologies is well-positioned to capitalize on India’s booming digital ecosystem. Investors are advised to monitor key financial developments and consider this stock as a strong candidate for portfolio diversification.