Jhunjhunwala-backed tech startup unveils IPO plan, stock doubles in 6 months

Rakesh Jhunjhunwala-backed Nazara Technologies is planning to hit the primary market soon. The Mumbai-based mobile gaming company informed its shareholders about its IPO plan in a letter earlier this month.

“This is to intimate you that the board of directors of Nazara Technologies, at its meeting held on September 16, 2020 approved the proposal to undertake an initial public offering of the equity shares of Rs 4 each of the company through the book building process and list the shares on one or more recognised stock exchanges in India,” says the letter. ETMarkets.com has seen a copy of the same.

The issue may comprise fresh shares and offer for sale of equity shares from existing shareholders. The company will soon file the draft red herring prospectus (DRHP) with markets regulator Sebi.

The issue size is yet to be decided, but some traders estimate the IPO price around Rs 950. When contacted, Nazara Technologies declined to comment.

Nazara has a diversified business model comprising subscription business, Freemium business and Esports business across emerging markets such as India, West Asia, Africa, Southeast Asia and Latin America.

Shares of Nazara Technologies have almost doubled in last six months in the unlisted market. The unlisted shares traded at around Rs 750-800 this week against their April price of Rs 400-450.

Besides Jhunjhunwala, Westbridge Ventures, Turtle Entertainment, IIFL Special Opportunity Fund and Emerging Investments are other key shareholders of the company.

Sandip Ginodia of Abhishek Securities said it is the first domestic gaming company eyeing a listing on the bourses. “Strong promoters and a unique business model are going to be key strengths of the issue,” he said.

Ginodia said leisure mobile gaming saw a lot of traction during the lockdown, as people had nothing much to do. It is among those segments of the media and entertainment sector, which has seen rapid growth due to the pandemic.

The company’s flagship mobile games include 'World Cricket Championship 2', 'Chhota Bheem Race' and 'Motu Patlu Game'. Its subsidiary Nodwin Gaming hosts multiple gaming events across the country.

The company’s consolidated revenue for financial year 2019 stood at Rs 183 crore, on which it generated a Rs 4.2 crore PAT. For the year 2018, these figures stood at Rs 180 crore and Rs 1.2 crore, respectively.

Dinesh Gupta, Co-founder of UnlistedZone, a Delhi-based firm that deals in unlisted shares, said the gaming technology company has no peer in the listed or unlisted space.

“The technology space is rocking in this market. However, some of the recent IPOs have not seen great success,” he said, adding that the company earlier did a private placement at Rs 728 per share in July 2019 and as such the IPO price is likely to be around Rs 950.”