Nazara retreats after hitting 52-week high post ₹900 cr fundraising announcement

Shares of Nazara Technologies Ltd dipped 9.1% to retreat from its 52-week high today amid profit booking by investors. The development came after Rekha Jhunjhunwala-backed company raised ₹900 crore in its biggest fundraising yet.

The scrip opened a gap up and hit its one-year high at ₹1,124.15 on the BSE, up 9.9%, but soon the stock corrected, only to settle at ₹1,017.50, lower 6.36% than yesterday's closing price.

At the current share price, the m-cap of Nazara stands at ₹7,861.97 crore. Shares of Nazara have surged 17.04% in the last year. In the year-to-date period, the stock has seen 20.18% growth. However, it has gained 52.64% in the past six months. Its one-month and six-month gains are 10.02% and 3.30%, respectively.

In the latest statement, Nazara said its board has approved a preferential equity issue to raise ₹900 crore. The company plans to use the capital infusion to fuel strategic acquisitions, fund business expansion, and enhance the ability to seize new growth opportunities.

The preferential equity issue will be placed with investors such as SBI Mutual Fund, Junomoneta Finsol (an associate of Plutus Wealth), Think Investments, Discovery Investments, Mithun and Siddharth Sacheti, Cohesion Investments, Chartered Finance and Leasing, Ratnabali Investments and Aamara Capital.

In a parallel development, Nazara acquired an additional 19.35% stake in Absolute Sports Pvt. Ltd., the parent company of Sportskeeda, for ₹145.5 crore, with 50% of the consideration paid in cash and the remaining amount in stock. With this, Nazara holds a 91% stake in Absolute Sports.

“This INR 900 crore fund-raise will be instrumental in accelerating our growth across key segments. Increasing our stake to 91% in Absolute Sports (Sportskeeda) reinforces our leadership in the sports media landscape," says Nitish Mittersain, CEO & Jt MD of Nazara.

Nazara last week acquired a 47.7% stake in Moonshine Technology Private Ltd (Moonshine), the parent company of online poker gaming platform PokerBaazi, for ₹832 crore through a secondary transaction.

It will also inject ₹150 crore in primary capital into Moonshine via compulsory convertible preference shares. PokerBaazi claims to be India’s “largest online poker platform”, which contributes to 85% of Moonshine’s net revenue. It claims to have 3,40,000 monthly active users as of May 2024.

Nazara's April-June quarter revenue surged to ₹79.90 crore from ₹64.80 crore in the quarter ending March 2024 and ₹47.50 crore in the year-ago period, while its profit stood at ₹96.30 crore against ₹1,053.50 crore loss in the previous quarter and ₹15.30 crore profit in the year-ago period.

Over the past few years, the company has been on an acquisition spree under its 'acquire and scale' strategy. In January this year, the online gaming company received the board’s approval for a 10.77% stake in Kofluence Tech, a social media influencer-led marketing-tech platform.