Deep Dive into Nazara's Prospectus

Updated: Mar 15

Nazara on the Horizon

In Jan'21, Nazara Technologies Limited, backed by India’s big bull Mr. Rakesh Jhunjhunwala, filed for an IPO in India. Here’s why it’s a WOW deal:

  1. First of its kind – Nazara Technologies is the first Indian Game-tech company to go public in India. Not just that, this could also set precedence for a slew of IPOs of tech companies that the Startup Ecosystem in India has been expecting since a long time.

  2. Gaming Behemoth – Nazara Technologies was predominantly engaged in developing and publishing online games under its own name. However, in the last couple of years, the company went in a shopping spree of startups and expanded its footprint in almost all segments of online gaming in India as well as abroad.

  3. India’s Online Gaming Sector is as hot as Mt. Etna – The online gaming market in India has been growing at 31.6% annually which tops the growth rates of both USA and China combined. It is poised to grow by 40% CAGR, from $1.1 Billion in 2019 to $2.8 Billion in 2022 (Deloitte).

Nazara’s Portfolio

The Online Gaming Sector comprises of companies of varied nature, each having its own nuances and potential (Refer to our article on the specifics of different segments of gaming). Nazara Technologies has been predominantly engaged in the development and publishing of online games. However, realizing the growing interest of users in other game forms and their future prospects, it gathered funds and went shopping. After having spent over ₹1,500 Crores in cash and giving out a pie from its own equity, today Nazara is a conglomerate of 21 gaming companies spread across 7 economies, making it a Gaming Behemoth!


Here’s how each of its investment strategically contributes to its growth prospects:

1. Paper Boats Apps Pvt. Ltd. a.k.a Kiddopia

This acquisition has facilitated Nazara’s entry into the gamified early learning business. The app claims to have the highest kids’ subscription in the country. It was acquired in Jan’20 on the backdrop of having positive unit economics and a potential to turn profitable in the coming years. The company witnessed significant growth in the first half of FY21, as the top-line zoomed by over 150% whereas the bottom-line improved by about 10%.


2. Nodwin Gaming Pvt. Ltd.

Nodwin Gaming is one of the early movers in the esports space in India, known for bringing global tournaments like ESL, and DreamHack to India. For perspective, Nodwin organized 82% of all unique e-sport events in India in 2019. Although the company posted a loss in FY20, Covid-19 related restrictions in FY21 that triggered a 300-400% surge in esports sponsorship and advertising, led to a growth of 14% for Nodwin as it posted a small profit of little over 1% in the first half of FY21. And Nazara did not even blink at the rising opportunities, as it pumped more money into the company in Sep’20, increasing its stake from 55% to 57%.


While we're here: On 9th Mar'21, Nodwin raised ₹164 Crores ($22.44 Million), from Krafton, South Korea (creator of PUBG). Nazara will continue to own majority stake in Nodwin. This move is likely to unlock opportunities to collaborate with South Korea, which is often regarded as the mecca of gaming and eSports.


3. Absolute Sports Pvt. Ltd.

Absolute Sports is the crowned jewel in Nazara’s gaming portfolio, being the most profitable of all. Hailing from the red-hot e-sports sector of India, the company is largely known for Sportskeeda, a leading sport and eSport news destination. The boom in e-sport advertising and sponsorship in 2020 coupled with exponential rise in the number of users has pivoted Sportskeeda as the largest e-sports news destination in India boasting over 20 million monthly-active users as of Sep’20. Rightly so, the company posted a phenomenal growth of over 150% in the first half of FY21 and even returned a profit of 23% (up from loss of 6% in FY20). Nazara owns 62% of this company.


4. Halaplay Technologies Pvt. Ltd. a.k.a Halaplay

Fantasy Sports sector has been creating exponential traction since the past few years, pioneered by Dream 11. Nazara entered this space through its acquisition of Halaplay, which is a Daily Fantasy Sports platform that allows gamers to form their own teams of players from among a pool of up to 50 players and play cash based quick games. In terms of userbase, Halaplay is currently only 1/8th of Dream11. In FY20, the company burned a lot of cash as it posted a net loss margin of -81% on revenue. Surprisingly in the first half of FY21, the company suffered a de-growth of about 70%, however, the loss was cut down to -22%.


5. Emerging markets

Nazara has made significant investments in some developing economies viz. Bangladesh, Kenya, Zambia, Nigeria and Uganda, all through wholly owned subsidiaries. While Zambia and Nigeria have been incurring losses, the remaining 3 segments have turned in profits, with Kenya contributing as much as 90% of such profits. All these companies are engaged in development and publishing of online games, including betting (in Kenya only).


6. Other Major Investments
  • Next Wave Multimedia Private Limited

  • Sports Unity Private Limited

Competitive Landscape

As mentioned earlier, Nazara will become the first gaming company in India to list itself in the stock exchanges. However, the booming Indian gaming sector has been attracting a lot of new entrants, both domestic and global, making it tougher for Nazara to maintain its stronghold. Here are some numbers for perspective:

  • The Nazara group derives a major chunk of its revenue from the Gamified Early Learning business i.e. Kiddopia – 39%. Nazara claims that Kiddopia is the leader in early learner edutainment space, already being one of the top downloaded apps in USA ranking 3rd on Apple App Store in December 2020, with an average rating of 4.4 out of 5 stars since its release. The company is expected to witness similar traction in India. However, edtech unicorns like Byju’s and Unacdemy, are at an arm’s length of disruption, considering the rising demand and potential of this sector.


  • The next big bet by Nazara is in the Esports space, which is currently contributing 32% of its revenue, through its 2 acquisitions - Nodwin Gaming and Sportskeeda. Key Developments:

  • Nodwin Gaming (Nazara’s subsidiary), which currently dominates this space with as much as 90-95% of the esports gaming revenue, observed doubling of its viewership during the Covid-19 period (per Inc42).

  • MPL and Gamerji, which are other key players in this space, have registered phenomenal growth in userbase during the Covid19 period.

  • Paytm First Games, also a key player, reported a 200% growth in its user base and a 4x increase in gameplays in the first half of 2020 (per mint).

  • MPL raised a new round of funding at a whopping $950 million valuation in Jan’21, re-flashing the growth witnessed after the onset of the pandemic.

  • In Feb’21 Tech Mahindra announced that it will launch a first-of-its-kind global chess league, with Vishwanathan Anand as the Advisor and Facilitator-in-Chief. Tech Mahindra becomes the 3rd big corporate to enter this space after Airtel and Reliance Jio.

  • Despite growing competition, Nazara is expecting to witness 100% revenue growth in FY21, owing to rapid search in its user base (per Inc42).


  • Fantasy Sports – Nazara is pursuing this space through its subsidiary Halaplay. The company has a mammoth task ahead, as Dream11 continues to dominate the market. Other key players include My11Circle, MyTeam11 and 11Wickets. The current userbase is as follows:

  • Dream 11 – 80 million +

  • MyTeam11 – 15 million +

  • Halaplay – 10 million +

  • 11wickets – 3 million +

Key Developments:

  • Dream11 became the title sponsor of IPL2020, resulting in a surge of over 44% in its userbase. The company currently leads this space owning over 90% of the sector's userbase.

  • MyCircle11 goes big as it ropes in VVS Laxman as its brand ambassador. The company has already signed Saurav Ganguly, Shane Watson and Rashid Khan as its brand ambassadors.

  • Niti Aayog has recently introduced a discussion paper on self-regulation of the fantasy sports sector. This is likely to create some barriers for new entrants and also add some responsibilities on the existing players.

Expected Offer Price

I know what you’re thinking, all this for how much?

Well, we’re also eagerly waiting for the company to declare the final price. But, here’s our take – On a peer comparison of Nazara Technologies with it’s listed US counterpart, Draft Kings, the fair price of Nazara’s shares is likely to be around ₹1060. We don’t give any investment advise, but you get the indication.


Update dt. 12/03/21: The price band of the IPO has been fixed at ₹1100 to ₹1101. The issue opens on 17th Mar'21 and closes on 19th Mar'21.

Our Take

Nazara Technologies and its group companies sure look promising, considering the company’s diversified gaming portfolio coupled with the exponential growth prospects of the Indian gaming sector. However, one cannot ignore the growing competition in this space as it attracts heightened attention from both domestic and global companies. In 2019 alone, India added 275 game developing companies, which has only increased since. Moreover, big companies like Airtel, Reliance Jio and Tech Mahindra have already made moves in this space, inciting other big tech companies to tap this space too.


Given the growing tension in the competitive landscape, maturing outlook of the government and ever evolving behavior of the Indian youth, continuous innovation fueled by inorganic growth and careful portfolio management, might be the only tools in Nazara’s case that will help it to maintain its stronghold in the red-hot gaming sector of India.

All figures of Nazara Technologies Ltd and its group companies is taken from Nazara's Draft Red Herring Prospectus and Annual Report for FY19-20.

The material herein is provided for informational purposes only. The information should not be viewed as professional, legal or other advice. Professional advice should be sought prior to actions on any of the information contained herein.