What to do with Jhunjhunwala backed Nazara Tech shares: Nazara Technologies, one of the favorite stocks of Indian stock market’s Big Bull Rakesh Jhunjhunwala, recorded a decline of more than 8.7 percent on Friday. Although this stock is trading 37 percent above its issue price, but after Friday’s fall, there is a possibility of it going down further.
CLSA, a closely-tracked brokerage firm, has given it a rating of ‘SELL’. He believes that this stock can fall 27 percent from its current level. One of the favorite stocks of Big Bull Rakesh Jhunjhunwala is being surprised at the estimate of such a huge fall in this stock. Jhunjhunwala is a pre-IPO investor in Nazara Technologies. He holds 10.82 percent stake in this company.
Nazara is the leader in e-sports, but many things are necessary for growth
Gaming company Nazara Tech is a leader in e-sports. The share of e-sports in the revenue of the gaming sector is ten percent. The total revenue is more than 750 crores. E-sports has been growing at 55 per cent since 2018 but still remains a niche segment. Although no competitor of Nazara is listed in the stock market, it competes with e-sports platform, Paytm First Games, Jio Games and Dream11.
The main source of revenue for Nazara Technologies is the fees paid by the users. CLSA expects Nazara’s revenue to grow by 35 per cent in the next three years.
Nazara share valuation is high
The valuation of Nazara’s stock will depend on how it continues to grow in India’s potential mobile gaming industry. Also, how much benefit does India’s first listed gaming company take to be the only player. According to CLSA, the valuation of Nazara stock is very high right now. Rakesh Jhunjhunwala had 32,94,310 equity shares of Nazara in the January-March quarter. Their total stake in this is 10.82 percent.
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(Article: Kshitij Bhargava)