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An Analysis of India’s Online Gaming Industry

gaming industry analysis

Many of us were fortunate enough to have grown up playing some of the greatest games on our PCs or gaming consoles. Right from Super Mario and Tetris all the way to GTA and FIFA, gaming has been a major part of most of our lives. With the arrival of affordable smartphones and cheap data packs, people from all age groups had turned to PUBG Mobile, Angry Birds, and Candy Crush. The online gaming industry is witnessing a massive boom in India, and many companies are lining up to secure a share of it. 

In this article, we dive into India’s online gaming industry and learn more about the listed companies that operate in it.

India’s Online Gaming Industry: An Overview

The Indian gaming industry is quite different from what we find abroad. PC gaming has been fairly successful in India, but there is low penetration of high-end personal computers as they are expensive. Platforms such as Playstation and Xbox are also not accessible to the average Indian. However, our country has made a quick and direct transition to mobile gaming over the past decade. The rise of cheap smartphones and low telecom tariff rates has accelerated the growth of mobile/online gaming. PUBG Mobile is a prime example of how these factors were monetized.

Within the first nine months of 2020, India secured the number one spot in mobile game downloads worldwide, registering nearly 730 crore total installs. This can be attributed to the lockdowns imposed due to the Covid-19 pandemic. A major portion of our population had turned to popular mobile games to pass the time. At its peak, PUBG Mobile had an estimated 3.4 crore Indians playing daily! Mobile users form a staggering 85% of the gaming industry, followed by PC users at 11%, and tablet users at 4%.  

According to a report from consulting firm KPMG, the Indian online gaming market was valued at Rs 13,600 crore in the previous financial year (FY21). It is projected to grow at a CAGR of 21% to reach Rs 29,000 crore by FY25! The online casual gaming sub-segment is valued at Rs 6,000 crore, accounting for 44% of the total online gaming revenues. The number of gamers in India is expected to grow from 43.4 crores (currently) to 65.7 crores by FY25.

Moreover, there are over 400 gaming startups at present that are accelerating the growth of the sector. Let us now look at some of the listed companies that operate in the Indian gaming industry.

Nazara Technologies

Nazara Technologies Ltd operates as a diversified gaming and sports media platform in India. The Mumbai-based company was incorporated in 1999. It primarily operates through the following segments: 

  • Freemium– games can be downloaded for free, but users will have to watch ads or pay for full access.  
  • Gamified Early Learning– the ‘Kiddopia’ brand approaches early-level education by using video game design and game elements in learning environments. The segment caters to kids between ages 2-6 years of age.
  • eSports– competitive online multiplayer gaming. Nazara Tech handles gamers, events, broadcasting, prizes, and other aspects of eSports. 
  • Subscription-based model– One-time payment of a monthly or annual fee to gain unlimited access for the duration.

Nazara Tech also receives cash flows from advertisements and several premium games. The company operates Nodwin Gaming and Sportskeeda in the eSports and eSports media segments, respectively. They also operate HalaPlay and Qunami under the skill-based, fantasy, and trivia games category. Nazara Tech had recently announced the acquisition of OpenPlay, a skill-based gaming platform. It has a presence in the Middle East, Africa, and North America as well. The company is backed by investors such as Rakesh Jhunjhunwala, IIFL, Abu Dhabi Investment Authority (ADIA), and Westbridge Capital.

Zensar Technologies

Zensar Technologies Ltd is a digital solutions and technology services company based in Pune. Established in 1991, the company provides information technology (IT) services and solutions across the globe. They provide services such as mobile app development, web development, e-commerce development, game development, Artificial Intelligence (AI) and Automation, Cloud Infrastructure, Data Management, Data Science, and other technologies. 

OnMobile Global

OnMobile Global Limited provides telecom value-added services in India and across the globe. The company was founded in 2000 and is headquartered in Bengaluru. It offers apps and services under the ONMO brand name. They also offer carrier services, such as ringback tones, videos, contests, and games.

Moreover, IT majors such as Tata Consultancy Services and Infosys have experienced personnel that develop 3D games and Augmented/Virtual Reality games. There is heavy competition amongst game developers worldwide.

Concerns Regarding Gaming in India 

As mentioned before, mobile gaming makes up a large chunk of the Indian gaming market as a result of access to affordable smartphones, high-speed 4G internet penetration, and the world’s lowest data tariffs. Improved disposable income amongst Indians has also led to greater willingness to make in-app purchases as well. The surge in gaming comes from an evolving demand for virtual entertainment with friends, family, and peer groups. There is also a sharp rise in the number of influencers that encourage Indians to play more games. These factors have reportedly made India the fourth-largest market for online games globally.

Time and again, experts and government authorities discuss the negative effects of gaming at length. Heavy-duty online gaming is frowned upon in India, as certain studies have shown that it could lead to several physical and mental problems, including addiction. While online games have become a vital element for time pass and entertainment, there is potential for overuse or misuse among the young population. There are risks related to exposure of children to inappropriate content, cyberbullying, gambling, and sexual exploitation. The gaming industry is also prone to constant cyber-attacks and data breaches. It is important to find an essential balance between the potential benefits and harmful effects of online gaming.

China, the largest market for online gaming, recently imposed a rather harsh rule that forbids under-18s from playing online games for more than three hours a week. Such a crackdown could severely impact the country’s $46 billion gaming industry and companies such as Tencent and Bilibili Inc.

What are your views on India’s online gaming ecosystem and industry? Let us know in the comments section of the marketfeed app. 

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Power Grid Reports 6% YoY Rise in Net Profit in Q4 – Top Indian Market News

Power Grid Corp Q4 Results: Net profit rises 6% YoY to Rs 3,526 crore

Power Grid Corporation of India reported a 6.42% YoY (or 4.7 QoQ) increase in consolidated net profit to Rs 3,526.23 crore for the quarter ended March (Q4). Its revenue from operations rose 3.5% YoY to Rs 10,510.32 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) rose 8.83% YoY to Rs 12,036.46 crore. The company’s board has recommended a final dividend of Rs 3 per share. Its board has also declared a bonus issue in the ratio 1:3. [Eligible shareholders will receive one extra share for every three shares held in the company]

Federal Bank to raise Rs 916 crore from IFC, associate entities

Federal Bank will raise nearly Rs 916 crore by issuing shares to International Finance Corporation (IFC) and its affiliates. The private lender’s board has approved the issuance of up to 10.5 crore equity shares (of the face value of Rs 2 each) to IFC, IFC Financial Institutions Growth Fund (FIG), and IFC Emerging Asia Fund (EAF) at Rs 87.39 per share. Federal Bank is also seeking shareholders’ approval to raise Rs 4,000 crore through a rights issue or Follow on Public Offer (FPO).

Read more here.

Natco Pharma Q4 Results: Net profit declines 43% YoY to Rs 53 crore

Natco Pharma Ltd reported a 43.68% YoY decline in consolidated net profit to Rs 53 crore for the quarter ended March (Q4). Net profit has declined by 15.57% when compared to the previous quarter. Its total income declined by 24.62% YoY (or 6.81% QoQ) to Rs 359.7 crore during the same period. Net profit for the financial year 2020-21 (FY21) declined by 4.32% YoY to Rs 440.9 crore. The company expects strong growth during the current financial year due to multiple high-value product launches in the US and a rebound in its India business.

Read more here. 

Lupin receives USFDA approval for Sevelamer Hydrochloride tablets 

Lupin Limited has received approval from the US Food & Drug Administration (USFDA) to market Sevelamer Hydrochloride tablets. The drug is used to control serum phosphorus in patients with chronic kidney disease on dialysis. According to IQVIA data, the tablets had estimated annual sales of $80 million (~Rs 592 crore) in the US for the 12 months ended March 2021. The product will be manufactured at Lupin’s facility in Nagpur.

Read more here.

IndusInd Bank launches digital lending platform ‘IndusEasyCredit’

IndusInd Bank announced the launch of ‘IndusEasyCredit’, a digital lending platform that enables customers to meet their financial requirements from the comfort of their homes. Both existing customers and non-IndusInd Bank customers can instantly avail of personal loans or credit cards on a single platform in a completely paperless and digital manner. Currently, customers can only apply for the ‘IndusEasyCredit’ facility through the bank’s website.

Read more here.

DB Corp Q4 Results: Net profit jumps 157% YoY to Rs 61.9 crore

DB Corp Limited reported a 157.42% YoY jump in consolidated net profit to Rs 61.91 crore for the quarter ended March (Q4). Net profit has declined by 37.48% when compared to the previous quarter. Its revenue from operations declined by 6.17% YoY to Rs 456.60 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) declined by 48.57% YoY to Rs 141.42 crore. The company’s board has recommended a final dividend of Rs 3 per share. DB Corp is a print media and publishing company based in Madhya Pradesh. 

Read more here.

Nazara Technologies to acquire 69.82% stake in gaming firm Publishme

Nazara Technologies Ltd has signed a binding term sheet to acquire a 69.92% stake in Publishme, a mobile game publishing agency based in the Middle East and Turkey. The company will invest nearly Rs 20 crore for acquiring the majority stake in Publishme. With this acquisition, Nazara Tech will expand its international footprint in the freemium segment. It aims to build local execution capabilities by cutting across key growth segments— freemium, gamified learning, and esports.

Read more here.

Adani Enterprises to invest Rs 1,000 crore in cement business: Report

According to a report from BusinessLine, the Adani Group is setting up a 5 metric tonne per annum (MTPA) cement plant in Maharashtra with an initial investment of Rs 1,000 crore. Adani Enterprises Limited (AEL) had recently announced the incorporation of a new wholly-owned subsidiary, Adani Cement Industries Ltd, to carry out the business as manufacturers and processors of all types of cement. The company has identified a 100-acre land in the Raigad district of Maharashtra to set up the cement plant. 

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Novartis India Q4 Results: Net profit rises 43% YoY to Rs 9.7 crore

Novartis India Ltd reported a 43.07% YoY increase in net profit to Rs 9.7 crore for the quarter ended March (Q4). Its revenue from operations rose 6%YoY to Rs 99.29 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) jumped 107.34% YoY to Rs 20.9 crore. The pharma company’s board has recommended a final dividend of Rs 10 per share. 

Read more here.

Domestic air passengers in May 63% lower than April: DGCA

The total number of domestic passengers that travelled by air declined by 63% to 21.15 lakh in May 2021, compared to 57.25 lakh passengers in April. The second wave of the Covid-19 pandemic has severely hit the aviation sector. IndiGo carried 11.69 lakh passengers in May and secured 55.3% of the domestic market share. SpiceJet flew 1.99 lakh passengers during the same month, accounting for a 9.4% market share. Go First (previously known as GoAir) carried 1.38 lakh passengers in May. The data was released by the Directorate General of Civil Aviation (DGCA).

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Tube Investments Q4 Results: Net profit jumps 141% YoY to Rs 143 crore

Tube Investments of India reported a 141.91% YoY jump in consolidated net profit to Rs 143.84 crore for the quarter ended March (Q4). Net profit has increased by 34% when compared to the previous quarter. Its revenue from operations jumped 165.3% YoY to Rs 2,624.72 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) declined by 6.54% YoY to Rs 286.32 crore. The company’s board has recommended a final dividend of Rs 1.5 per share. Its board has also approved the fundraising of up to Rs 200 crore via debt securities. 

Read more here.

Infosys Finacle launches digital banking SaaS offering for urban co-op banks

Infosys Finacle has launched a digital banking software-as-a-service (SaaS) platform to help Indian urban cooperative banks (UCBs) modernize their business and operations. The company is a part of EdgeVerve Systems, a wholly-owned subsidiary of Infosys Ltd. The platform has already been adopted by three leading UCBs in India— Vidya Sahakari Bank, Urban Co-operative Bank, Bareilly, and Zoroastrian Cooperative Bank

Read more here.

IPO Updates: 

Dodla Dairy

The Rs 520-crore IPO of Dodla Dairy Ltd was subscribed 3.3 times on the second day of bidding. The portion reserved for retail investors was subscribed 6.18 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 6% and that of qualified institutional buyers (QIBs) 28%. You can learn more about the IPO here.

KIMS 

The Rs 2,144-crore IPO of Krishna Institute of Medical Sciences Ltd was subscribed 56% on the second day of bidding. The portion reserved for retail investors was subscribed 1.95 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 9% and that of qualified institutional buyers (QIBs) 32%. You can learn more about the IPO here.

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Bank of Baroda Reports Net Loss of Rs 1,046 crore in Q4 – Top Indian Market News

Bank of Baroda Q4 Results: Net loss at Rs 1,046 crore

Bank of Baroda reported a standalone net loss of Rs 1,046.5 crore for the quarter ended March (Q4 FY21). It had posted a net profit of Rs 506 crore in the corresponding quarter last year (Q4 FY20). Net interest income (NII) rose 4.5% YoY to Rs 7,107 crore in Q4 FY21. The gross non-performing assets (GNPA) ratio stood at 8.87% during the quarter, compared with 8.48% in Q3 FY21. The bank’s provisions for bad loans rose 44% YoY to Rs 4,593 crore during the quarter under review.

The state-owned lender has announced plans to raise Rs 5,000 crore through the issuance of equity shares and bonds.

Read more here.

M&M to invest Rs 12,000 crore to revamp vehicles, regain market share

Mahindra and Mahindra (M&M) Ltd plans to spend around Rs 12,000 crore over the next three years towards launching and upgrading its range of passenger vehicles (PV) and commercial vehicles (CV). The funds will be utilized for launching 23 new products across its PV and CV segments in the next five years. M&M will invest Rs 3,000 crore towards its farm equipment segment and launch 14 news products across last-mile mobility and new pick-up ranges. Through these investments, the automaker seeks to regain lost market share. 

Read more here.

Divi’s Laboratories Q4 Results: Net profit rises 29% YoY to Rs 502 crore

Divi’s Laboratories Ltd reported a 29.31% YoY (or 7% QoQ) increase in consolidated net profit to Rs 502.02 crore for the quarter ended March (Q4). Its revenue from operations rose 28.7% YoY to Rs 1,788.19 crore during the same period. For the financial year ended March 31, 2021 (FY21), net profit has increased by 44.15% YoY to Rs 1,984.29 crore. The board of Divi’s Labs has declared a final dividend of Rs 20 per share.

The pharma company said it has taken up another capital expenditure (capex) program with an estimated investment of ~Rs 400 crore for fast-tracking a customs synthesis project.

Read more here.

HDFC Bank, SBI Cards warn customers of restrictions if they deal in cryptocurrencies: Report

According to a report from BloombergQuint, HDFC Bank has begun cautioning its customers officially against dealing in virtual currencies (or cryptocurrencies). These emails inquire about the customers’ virtual currency transactions and advise against such transactions citing a 2018 circular from the Reserve Bank of India (RBI), which was later struck down by the Supreme Court. Other companies such as SBI Cards & Payment Services have also sent out mailers stating that services may be curtailed if customers use their cards to deal in cryptocurrencies.

Read more here.

Glenmark Pharma Q4 Results: Net profit rises 6% YoY to Rs 234 crore

Glenmark Pharmaceuticals Ltd reported a 6.15% YoY increase in consolidated net profit to Rs 233.87 crore for the quarter ended March (Q4). Net profit has declined by 5.76% when compared to the previous quarter. Its revenue from operations rose 3% YoY to Rs 2,859.9 crore during the same period. For the quarter ended March 31, 2021 (FY21), net profit increased by 25% YoY to Rs 970 crore. The pharma company’s board has declared a dividend of Rs 2.5 per share.

Read more here.

Zydus Cadila gets USFDA approval to market Fluphenazine Hydrochloride tablets 

Zydus Cadila has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Fluphenazine Hydrochloride tablets. The drug is used to treat symptoms of a certain type of mental condition/disorder called schizophrenia. The pharma company will manufacture the drug at its formulation manufacturing facility at the Special Economic Zone (SEZ), Ahmedabad.

Read more here.

Advanced Enzyme Tech Q4 Results: Net profit rises 1.12% YoY to Rs 31 crore

Advanced Enzyme Technologies reported a 1.12% YoY increase in consolidated net profit to Rs 31.68 crore for the quarter ended March (Q4). Net profit has declined by 26.5% when compared to the previous quarter. Its revenue from operations rose 20.82% YoY to Rs 133.22 crore during the same period. For the financial year ended March 31, 2021 (FY21), net profit rose 13% YoY to Rs 146.20 crore. The company’s board has recommended a dividend of Rs 0.9 per share.  

The Board of Directors of Advanced Enzyme Technologies has also approved the acquisition of an additional 15% stake in JC Biotech. The company will purchase 31.06 lakh shares of JC Biotech for a consideration of Rs 21.12 crore.

Read more here.

Fuel prices touch record highs; petrol cross Rs 100 per litre in Mumbai

Petrol and diesel prices were hiked across India for the 15th time this month on Saturday (May 29). In New Delhi, petrol prices were raised by 26 paise to 93.94 per litre, while diesel prices were increased by 28 paise to Rs 84.89 per litre. The price of petrol has crossed the Rs 100 per litre mark in Mumbai. This is the 15th increase in fuel prices since May 4, when state-owned oil firms ended an 18-day hiatus in rate revision they observed during assembly elections in states such as West Bengal and Kerala.

Read more here.

Affle India Q4 Results: Net profit jumps 282% YoY to Rs 58.5 crore

Affle India reported a 282% YoY jump in consolidated net profit to Rs 58.5 crore for the quarter ended March (Q4). Net profit has increased by 90% when compared to the previous quarter. Its revenue from operations rose 76.9% YoY to Rs 141.57 crore during the same period. For the financial year ended March 31, 2021 (FY21), net profit has jumped 105% YoY to Rs 134.80 crore. Affle India is a global technology company that delivers consumer acquisitions, engagements, and transactions through relevant mobile advertising.

Nazara Technologies Q4 Results: Net profit at Rs 3.15 crore

Nazara Technologies reported a consolidated net profit of Rs 3.15 crore for the quarter ended March (Q4 FY21). It had posted a net loss of Rs 3.30 crore in the corresponding quarter last year (Q4 FY20). Its revenue from operations rose 41.69% YoY to Rs 123.38 crore in Q4 FY21. For the financial year ended March 31, 2021 (FY21), the net profit stood at Rs 9.24 crore. This is compared to a net loss of Rs 24.65 crore in FY20. Recently-listed Nazara Technologies is a diversified gaming and sports media company. 

Read more here.

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Market News Top 10 News

Bharat Dynamics Signs Rs 1,188 crore Deal With Defence Ministry – Top Indian Market News

Bharat Dynamics to supply 4,960 Milan-2T missiles to Indian Army

The Ministry of Defence, on Friday, signed a Rs 1,188 crore deal with Bharat Dynamics Ltd (BDL) for the supply of 4,960 Milan 2T Anti-Tank Guided Missiles to the Indian Army. The missiles, having a range of 1,850 metres, can be fired from the ground as well as from vehicle-based launchers. The missiles are being produced by BDL under license from French defence major MBDA Missile Systems.

Read more here.

Govt sells 10% stake to exit Tata Communications

The Central Government has exited Tata Communications Ltd (TCL) after selling its 10% stake to Tata Sons’ subsidiary Panatone Finvest in an off-market trade. Around 2.85 crore equity shares held by the government were sold to Panatone Finvest. The government has already sold a 16.12% stake in TCL through an offer for sale (OFS) to retail and non-retail investors at the floor price of Rs 1,161 per share.

Read more here.

PNC Infratech’s arm secures order worth Rs 1,412 crore

PNC Infratech said its subsidiary, PNC Meerut Haridwar Highways, has secured a road project from the National Highways Authority of India (NHAI). The project consists of four-laning the Meerut-Nazibabad section of NH-19 in Uttar Pradesh on Hybrid Annuity Mode (HAM). The order is valued at Rs 1,412 crore. The project comes under the Central government’s Bharatmala Pariyojana.

Strides Pharma’s subsidiary partners with RDIF to supply Covid-19 vaccine

Strides Pharma Science Ltd said its biopharmaceutical division, Stelis Biopharma, has partnered with the Russian Direct Investment Fund (RDIF) to supply 200 million doses of the Sputnik V vaccine.  The vaccine demonstrated an efficacy rate of 91.6% against the Covid-19 infection and is now approved for use in over 50 countries. The parties intend to commence supplies from Q3 (July-September) of calendar year 2021. 

Read more here.

Tata Motors introduces new compact ambulance Magic Express

Tata Motors has launched Magic Express, its first product in the compact ambulance segment, with the promise of easy maneuverability in congested Indian cities. The Magic Express Ambulance is compliant with AIS-125 government norms for the ambulance category. It can seat five attendants, apart from the driver and patient. Tata Motors said that the ambulance is designed to specifically support medical and health-related services, with a focus on the speedy movement of patients that require emergency care. 

Read more here. 

TV advertising volumes rose 21% in Jan-Feb 2021: BARC

According to data released by the Broadcast Audience Research Council (BARC), advertising volumes in January-February 2021 were 21% higher when compared to the same period last year. The report states that FMCG and e-commerce categories grew by 36% and 21%, respectively, during Jan-Feb compared to 2020. TV channels in the movies and music genre saw a spike in ad volumes at 25% and 24%, respectively. 

Read more here.

HDFC Bank’s MSME book grows 30% YoY to cross Rs 2 lakh crore-mark

HDFC Bank said its Micro, Small, and Medium Enterprises (MSME) loan book grew 30% YoY to cross the Rs 2 lakh crore-mark as of December-end. This growth was driven by the Emergency Credit Line Guarantee Scheme (ECLGS)- a Rs 20 lakh crore package introduced by the Finance Ministry to support the MSME sector amidst the Covid-19 pandemic. HDFC Bank has become the second-largest lender in the MSME segment after the State Bank of India (SBI).

Read more here.

Aarti Drugs announces Rs 60 crore share buyback plan

Aarti Drugs Limited said its Board of Directors have approved the buyback of up to 6 lakh fully paid-up equity shares (of the face value of Rs 10 each) at Rs 1,000 per share. This represents 0.64% of the total number of equity shares of the firm. The total buyback size is Rs 60 crore. Aarti Drugs’ share buyback price of Rs 1,000 is at a premium of 46% to its closing price of Rs 683 on Thursday. 

Read more here.

TCS announces salary hikes for all employees

Tata Consultancy Services (TCS), on Friday, announced salary hikes for all its employees. The salary hikes will be effective from April 1, 2021. The IT major had increased salaries by 6-8% in October 2020. With the upcoming hike, around 4.6 lakh TCS employees will get around 12-14% average increment in six months’ time. 

Read more here.

IPO Updates:

Suryoday Small Finance Bank

The Rs 582-crore initial public offering (IPO) of Suryoday Small Finance Bank was subscribed 2.37 times on the final day of bidding. The portion reserved for retail investors was subscribed 3.09 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 1.31 times and that of qualified institutional buyers (QIBs) 2.18 times.

Nazara Technologies

The Rs 582-crore initial public offering (IPO) of Nazara Technologies was subscribed 175.46 times on the final day of bidding. The portion reserved for retail investors was subscribed 75.29 times and that of employees 7.55 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 389.89 times and that of QIBs 103.77 times. It has become the second-most subscribed IPO (after MTAR Technologies) so far in 2021.

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Editorial

Rakesh Jhunjhunwala-backed Nazara Technologies Comes Up With IPO

nazara tech ipo

Nazara Technologies, a Mumbai-based gaming, and e-sports company has come up with its IPO starting 17th March 2020. Nazara’s products comprise Subscription, Freemium, eSports, Skill-Based Games. It has expanded its operations in Africa, North America, and the Middle East as well.

The company is backed by High Net Investors like IIFL, Rakesh Jhunjhunwala, Westbridge Capital, and a few more. The company doesn’t have any ‘listed’ competitors and will be the first of its kind to debut in the Indian Stock Market. In this piece, we explore what Nazara Technologies’ role is in the IPO Bull run. 

IPO Review

IPO Opening DateMar 17, 2021
IPO Closing DateMar 19, 2021
Issue TypeBook Built Issue IPO
Face ValueRs 4 per equity share
IPO PriceRs 1100 to Rs 1101 per equity share
Min Order Quantity13 Shares
Listing AtBSE, NSE
Issue Size5,294,392 Eq Shares / upto Rs 582.91 crore
Offer for Sale5,294,392 Eq Shares / upto Rs 582.91 crore

Business Model

  • The Indian gaming industry works differently from abroad. PC gaming was fairly successful in India, yet there was a low-penetration of high-end ‘personal computers’ due to the high costs involved. Subsequently, ‘box gaming systems like the PlayStation and Xbox didn’t have much success. India directly transitioned to mobile gaming. Mobile phones were inexpensive, the internet was cheap, and had a good penetration rate. PUBG mobile is a perfect example of how these factors were monetized. 
  • Since the company operates in the virtual space, it has an asset-light business model. It has tie-ups with various telecom operators, including but not limited to Airtel, Vodafone, and Idea in India and Etisalat and Ooredo in the Middle East for gaining subscription-based users. Apart from this, the company has tied-up with over 113 telecom operators in 61 countries. It offers a catalog of over 1,000 android games on its subscription service through different content aggregators across the globe. 
  • The company essentially deals in the online gaming space and e-sports. The company generates cash flows from the following elements:
    • Freemium – Game can be downloaded for free but the user may have to watch ads or pay for full access  
    • Gamified Early Learning– approaching early level education by using video 
    • game design and game elements in learning environments.
    • Esports – Competitive online multiplayer gaming.
    • Subscription –One-time payment of a monthly or annual fee to gain unlimited access for the duration  
    • Apart from this, the company gains cash flows from advertisements and paid/premium use games.
  • The company has newly entered the ‘gamified early learning’ segment. The segment targets kids between ages 2-6 years of age. The subscription for this segment increased during the COVID-19 pandemic. This was since remote accessibility of educational content became a necessity during the pandemic. From contributing 7% to total revenue in March 2020, this segment now contributes ~39%, the highest of all segments.
  • The company also works on competitive online multiplayer gaming or esports. The company’s subsidiary Nodwin Gaming specializes in it. Nodwin Gaming partners with other brands to create multiple gaming events and intellectual properties in India, such as Mountain Dew Arena, Indian Gaming Show, and Asus ROG Masters. It has partnered with ESL, the biggest esports organizer in the world. It handles gamers, events, broadcasting, prizes, and other aspects of the segment. 
  • The company faces competition from companies like Sony Interactive Entertainment, Reliance Jio, Tencent, and Microsoft Game Studios to emerging gaming start-ups such as Dream11, Mobile Premier League (MPL), Games 24×7 

Financials

.30-Sep-2031-Mar-2031-Mar-1931-Mar-18
Total Assets7,986.557,768.295,145.834,707.59
Total Revenue2,070.062,621.461,860.981,819.40
Profit After Tax(101.07)(266.15)67.1310.23
  • The company was profitable in the past. However, in the past year, the company has made many acquisitions in the gaming industry in order to expand its domain in the field. In FY20, the company acquired Paper Boat Apps Pvt Ltd, AbsoluteSports Pvt Ltd, CrimzonCode Technologies Pvt Ltd, Halaplay Technologies Pvt Ltd. These acquisitions have eaten into the profit books.
  • The company’s assets and revenue have grown constantly. Its revenue has grown ~69.8% in the past 2 years.
  • Nazara has borrowings worth Rs 1.64 crore. The company operates on a low level of debt. 
  • India and North America businesses contribute an equal proportion of ~41% each to the revenue stream. The remaining 18% is contributed by Asia Pacific and Middle East countries.

After the COVID-19 pandemic, the consumption of online content increased. Nazara did eventually benefit from it. It is going to be the first listed company in the online gaming segment. It has a grey market premium of 77% as of 16th March, 2020. The company was in profits 3 years ago, but has been recording constant losses for the past 2 years because of its high number of acquisitions.

Krafton, the company behind PUBG Mobile has acquired 15% stake in Nodwin Gaming, a subsidiary of Nazara. There might be a possibility of Nodwin Gaming playing a part in PUBG Mobile’s operations after its relaunch in India. The company’s long term prospects on profitability and operations are a little tricky, but the company can definitely make a good one for listing gains. 

You can check out the Red Herring Prospectus for fine details on Nazara Technologies IPO over here.