Rakesh Jhunjhunwala-backed Nazara Technologies IPO sails through on strong retail demand

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Nazara Technologies’ Rs 583 crore initial public offer (IPO) witnessed strong demand, with the issue fully subscribed on the first day of bidding on Wednesday, led by strong demand from retail investors.

The public offer has received bids for 36,22,567 shares till 12.10 pm against 29,20,997 shares offered by the company, indicating an oversubscription by 1.24 times so far.

The company has fixed a price band of Rs 1,100-1,101 a share for the public offer, which will conclude on March 19. The quota reserved for retail investors got oversubscribed by more than 3 times.

The gaming firm on Tuesday said it has mopped up a little over Rs 261 crore from anchor investors. Among the anchor, investors are the Government of Singapore, Abu Dhabi Investment Authority, Goldman Sachs India Ltd, Nomura Funds Ireland Public Limited Company, Steadview Capital Mauritius Ltd.

In addition, SBI Mutual Fund (MF), HDFC MF, ICICI Prudential MF, Axis MF, Sundaram MF, Kotal MF and Aditya Birla Sunlife MF too participated in the anchor book bidding.

The company, backed by ace investor Rakesh Jhunjhunwala, is popularly known for its games on World Cricket Championship, Chhota Bheem and Motu Patlu series.

ICICI Securities, Nomura Financial Advisory and Securities (India) Private, Jefferies India and IIFL Securities have been appointed as the merchant bankers to manage the company’s initial public offer.

Brokerages are positive on the ongoing IPO. According to Hem Securities, the company is bringing the issue at EV/sales multiple of around 12.8x at a higher end of price band on FY20 sales basis. Nazara being the leader in India across diversified gaming and sports media platform has a successful business model and established presence in India, a market with economic, technical and cultural complexities, has given it a competitive advantage. Also the company being the pioneer in the field will get the first-mover advantage. Hence, Hem Securities recommends investor subscribe to the issue for the short and long term.

Nirmal Bang Securities also gave a ‘Subscribe’ rating to the issue. “Over FY18-20, the company sales have grown at a CAGR of 19.8%, both organic and inorganic way, growth in revenue is despite the decline in telco business revenue which was the major business. Going ahead, being into the online gaming space, which over FY20-FY23, is expected to grow at a CAGR of 31.7% in India, and 11.8% in the USA we feel the company can sustain higher growth,” Nirmal Bang Securities said.