Indian gaming sector enters stock markets with Nazara Tech IPO

BENGALURU:  India’s top e-sports company, Nazara Technology has become the first of its kind to  go public with an IPO. Nazara’s issue was subscribed 3.8 times on the opening day on Wednesday and the mobile gaming firm is looking to raise Rs 583 crore through the  IPO.

The issue offers 5.29 million shares at a price band of Rs 1,100-1,101. Analysts expect the Indian gaming sector to begin attracting significant investment and the industry is expected to grow at a CAGR of 40 per cent by 2022. Nazara Technology’s public listing comes ahead of other keenly awaited start-up IPOs such as that of Zomato, Nykaa, and Flipkart all of which are also said to be readying for IPOs this year.

Nazara’s edge in the market, according to brokerage firm Motilal Oswal, will be the absence of clear competition and the huge under-penetration in the segment. The company derives a significant part of its revenue from gamified e-learning which is growing at an annual rate of 40 per cent.

The company’s revenues have steadily grown over the last couple of years and counts market bull Rakesh Jhunjhunwala as one of its major backers. Cheap internet, smartphones, and a love for sports has triggered a massive growth in online gaming and the segment has drawn over $450 million in investment over the past few years, a recent Deloitte report says. 

The pandemic has provided further impetus to the sector’s growth, with such platforms now commanding a total userbase of 300 million. Covid-induced lockdowns alone, for instance, increased the average time spent on gaming platforms by 21 per cent. The Indian online gaming industry is expected to be valued at around $2.8 billion by 2022.