NAZARA - Nazara Technolo.

📊 NSE: NAZARA 🏢 Telecommunications - Service Provider 📅 Last Updated: 12/14/2025 10:23

💰 Financial Performance

Revenue Growth by Segment

Nazara delivered H1 FY26 revenue of INR 1,025.2 Cr, up 80.2% YoY. The Core Gaming segment (Mobile, PC-Console, Offline) grew 159% YoY in H1 FY26. AdTech revenue grew 501% YoY in Q2 FY26 to INR 145.1 Cr, largely driven by the consolidation of Space and Time. Offline gaming (Smaaash) contributed INR 24 Cr in Q2 FY26 revenue.

Geographic Revenue Split

64% of gaming revenue is derived from premium high-ARPU markets, specifically the US and UK. This geographic focus provides a hedge against regional regulatory volatility in India and leverages higher monetization per user.

Profitability Margins

Core Gaming EBITDA margin stood at 23.2% for H1 FY26. Overall EBITDA for H1 FY26 was INR 109.4 Cr, up 118.5% YoY. However, Q2 FY26 PAT was negative INR 33.9 Cr due to a significant impairment of INR 914.7 Cr related to Real Money Gaming (RMG) investments.

EBITDA Margin

Overall EBITDA margin for Q2 FY26 was 11.8% (INR 62 Cr on INR 526.5 Cr revenue), representing a 146.4% YoY increase in absolute EBITDA. Core gaming margins are targeted to remain in the 20-25% range through improved user acquisition efficiencies and data analytics.

Capital Expenditure

Nazara raised INR 509.99 Cr through a preferential issue of 71,42,856 equity shares at INR 714 each in September 2025 to fund growth. Specific maintenance CapEx is not disclosed, but the company is aggressively investing in 'Centers of Excellence' for AI and growth.

⚙️ Operational Drivers

Raw Materials

As a digital gaming company, 'raw materials' consist of Intellectual Property (IP) acquisition costs, software development talent, and user acquisition (UA) marketing spends. Marketing and compliance costs are noted as rising but managed through digital efficiencies.

Import Sources

Not applicable for a software/gaming entity; however, talent and IP are sourced globally, with a focus on UK-based publishing (Curve Games) and US-based studios (WildWorks).

Key Suppliers

Key partners include platform providers like Apple (App Store), Google (Play Store), Sony (PlayStation), and Valve (Steam) for distribution, and licensed IP partners like Bigg Boss.

Capacity Expansion

The offline gaming segment (Smaaash) expanded from 10 centers in February 2025 to 14 centers by September 2025. The company plans to scale this to 100 centers within the next two years to drive physical-to-digital synergies.

Raw Material Costs

User Acquisition (UA) and marketing costs are primary drivers. The company uses 'Centers of Excellence' to improve LTV/CAC ratios, aiming to keep margins stable at 20-25% despite rising compliance and IT costs.

Manufacturing Efficiency

Efficiency is measured by 'Cash Conversion'; Operating Cash Flow (pre-tax) for H1 FY26 was INR 71.5 Cr, up 170.8% YoY, demonstrating high conversion from EBITDA.

Logistics & Distribution

Distribution is primarily digital via global platforms. PC/Console publishing (Curve) achieved 1.25 million units for 'Human Fall Flat' in September 2025, up 25% YoY.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

Growth will be achieved by scaling 'Live Ops' to improve retention, expanding existing IPs like 'Animal Jam' onto new platforms like Roblox, and aggressive M&A, such as the acquisition of Smaaash from NCLT and the consolidation of Curve Games.

Products & Services

Mobile games (Animal Jam, Kiddopia), PC/Console games (Human Fall Flat, Wobbly Life), eSports events (Nodwin), AdTech services (Datawrkz), and physical entertainment centers (Smaaash).

Brand Portfolio

Animal Jam, Kiddopia, Nodwin Gaming, Smaaash, World Cricket Championship (WCC), Datawrkz, Curve Games, Human Fall Flat, Wobbly Life.

New Products/Services

Planned launch of 'Animal Jam' on Roblox and expansion of digital IPs into the Indian market using the 'Bigg Boss' license. Smaaash 2.0 is being developed to reimagine offline gaming centers.

Market Expansion

Expansion into Saudi Arabia and emerging markets for eSports, where the sector is performing 'phenomenally well' compared to the declining Western markets.

Strategic Alliances

Strategic investment from Sony (at a pre-money valuation of $349 million for Nodwin) and partnerships with IP owners for console publishing.

🌍 External Factors

Industry Trends

The industry is shifting from individual game launches to long-term franchise building across multiple platforms (Mobile, PC, Console, Offline). Mobile remains the largest segment at 55% of the global market.

Competitive Landscape

Competes with global mobile gaming studios and domestic RMG platforms, though it is pivoting away from RMG due to regulatory headwinds.

Competitive Moat

Moat is built on 25+ owned/licensed IPs and a diversified portfolio that provides stability. Shared 'Centers of Excellence' create operating leverage that competitors with single-studio models lack.

Macro Economic Sensitivity

Highly sensitive to digital consumption trends in the US and UK (64% of revenue) and regulatory shifts in the Indian gaming market.

Consumer Behavior

Shift toward multi-platform engagement (e.g., mobile users moving to Roblox) and recurring revenue models like subscriptions and seasonal passes.

Geopolitical Risks

The eSports segment is shifting focus to Saudi Arabia due to market death in the West, making the company sensitive to Middle Eastern economic and social policies.

⚖️ Regulatory & Governance

Industry Regulations

New Indian regulations on skill-based real-money gaming (RMG) have significantly impacted valuations, leading to a INR 914.7 Cr impairment. Compliance costs are rising due to these evolving standards.

Legal Contingencies

The company acquired Smaaash through the National Company Law Tribunal (NCLT) process, which involves ongoing 'cleaning up' and optimization of the business.

⚠️ Risk Analysis

Key Uncertainties

Regulatory uncertainty in the Indian RMG space (potential for further bans or tax changes) and the sustainability of eSports funding in Western markets (Freaks4U losses).