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SPARK CAPITAL UNIQUEORNS SERIES COVERAGE

NAZARA TECHNOLOGIES –
Initiating Coverage
Let the Games begin!

2 July 2021

GNANASUNDAR
 [email protected]
 +91 44 4344 0062
 Analyst Certification and Required Disclosures begin on last two pages – Click here
Indian Online Gaming Industry

Page 2
 INDIAN ONLINE GAMING INDUSTRY
Nazara Technologies

The word ‘Game’ has always evoked a sense of excitement in all of us. From avidly marking the weekly ‘Physical Education (PE)’ class in our school diaries to organising ‘game
nights’ with family and friends, games have always been something that we look forward to because of the hope, exhilaration and fun that surrounds it. The definition of gaming INITIATING COVERAGE
has however transformed from competing on physical strength to becoming more of a mental & physical strength competition over time. Alongside, we have witnessed the rapid 02 July 2021
evolution of video games in terms of hardware and game design over the past 60 years. The hardware has transformed from single game arcades at public places to personalised
mobile phone applications, while game designs are everchanging with technologies such as Virtual Reality (VR), Modified Reality (MR) and Extended Reality (XR). The Indian online 250%
gaming industry has gained significant attention in the recent past on the back of growth momentum created by mobile phone-led casual games, indigenous real money games,
cricket-driven fantasy sports and the emergence of esports. Several of the nascent video game companies in India have established their presence in more than one category and
are currently in the phase of customer acquisition. The widespread presence should enable them to shift focus in line with changing technological trends and consumer 200%
preferences while the upfront high customer acquisition cost should provide for operating leverage over the medium-term. The Indian online gaming industry is poised to grow at
~31% CAGR over the next 5 years led by new gamers, an increase in the proportion of paid gamers and a slight increase in average spend per gamer. We are certain that the
150%
structural growth drivers of the Indian online gaming industry are firmly established.
Key Trends we are witnessing in the Indian Online gaming Industry
100%
Video Games have evolved rapidly in terms of hardware and gaming details. Technology adoption and agility decide long-term winner: Gaming preferences among the casual
gamers have changed at a rapid pace, companies once having established a ‘Cash Cow’ game, should incessantly innovate to sustain.
Challenge for Indian Gaming Industry is monetization. Making freemium users to pay has been difficult. Investments in hardware minimal: The comparison of the Indian gaming 50%
market in 2020 with the Chinese market of 2013 is tempting. However, an increase in the number of paid consumers is going to be challenging. Several International companies in the
digital media space have found it challenging to make the Indian consumer pay for the content.
0%
Online gaming has become a prominent part of Indian entertainment industry; likely to grab higher share of overall entertainment spends in medium-term: Theatrical movie

Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

Jun-21
spends and television subscription witnessed increased patronage in India when Gen X (born between 1965-1980) and Gen Y (born between 1981-1996) respectively entered the
working-age population. Similarly, Gen Z (1997 – 2015) should drive online gaming spend over the next 10 years as it has become the primary entertainment option for them.
The lucrative gaming segment from a medium-term perspective is transaction-based games, where Indian publishers dominate: Transaction-based gaming, despite their legal NSE Media Nifty 50
hurdles in India, have become ~82% of the online gaming market as the gamers are familiar with the games and there is a probability of earnings returns.
Real money games offering Rummy are the most lucrative in terms of realisation; publishers in this segment are most profitable: Banking on the familiarity and popularity of the Stock Performance (%)
Indian 13 card poker game (rummy), several game publishers have taken this version of mobile gaming and found success with a few applications crossing 10 million downloads.
1m 3m 12m
Fantasy sports, with Cricket as underselling proposition, has found immense success in India. Given the high stickiness, upfront marketing spends galore: Capitalizing on the craze
for ‘cricket’ in India, fantasy sports with real money betting has one of the largest paying user bases in India. These are exciting business models from an operating leverage perspective NSE MEDIA 3% 10% 35%
as incremental customer acquisition cost is low.
Nifty 50 1% 12% 52%
Esports is a proven business model globally; with Indian viewers beginning to catch up with this trend, prospects for esports in India are exciting: Monetisation for esports unlike
other segments of online gaming is not dependent on gamer subscription but mostly on the back of sponsorships and media rights. This makes us believe that this segment growth
would outpace the online gaming industry in the medium-term.
International game titles are popular among Indian casual segment gamers; rise in hard core gamers to drive monetization in long-term: Casual gamers are 3x more than the RESEARCH ANALYSTS
transaction-based gamers. However, the monetization is still at abysmal levels. International players dominate the offerings in this segment given their superior game designs. Indian
GNANASUNDAR
publishers are limited to card and cricket-based games.
[email protected]
Gamification as a theme is set to gain pace; industries such as educations, financial services, fitness and retail using games to engage with consumers: Gamification, as a theme, has +91 44 43440062
been gaining prominence across various other fields as conveying messages and ideas via gaming has been proven to be easier and more effective.

find SPARK RESEARCH on Bloomberg [RESP SPAK <go>] | FACTSET | REFINITIV EIKON Page 3
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Indian Gaming market is poised to grow at a ~31% CAGR over the next two years; increase in number of paid users to be the key growth driver

Monetisation to be led by Subscription

The Indian Online Gaming industry should grow at ~31% CAGR over the next 5 years led by
Advertisement, 6% Subscription, 94% ~11% CAGR in the number of gamers and ~18% CAGR in monetisation per user. We anticipate the number of gamers to increase
at a ~11% CAGR…
Online Gaming Industry Number of gamers (mn)
600
(Rs. 77bn) 360 420 480 540 600 660 720 780
We anticipate an increase in the number of paid 18 77 90 103 116 128 141 154 167
user from ~20mn to ~62mn over the next 5 years 400 560 600
24 103 120 137 154 172 189 206 223 510
400 450
65 10% 12% 360
30 129 150 172 193 215 236 258 279
200
55 9% 10%
8% Monetisation 36 155 181 206 232 258 284 310 335 2020 2021e 2022e 2023e 2024e 2025e
45 7% 8%
per gamer per
6% 41 176 205 234 264 293 322 352 381 Number of gamers (mn)
35 6% month (Rs.)
62 6% 47 202 235 269 303 336 370 403 437
25 50 …as only ~41% of the Gen Y + Gen Z population
42 4% 53 228 266 304 341 379 417 455 493
15 32 are playing online games
20 25
2% 59 254 296 338 380 423 465 507 549
5
-5 2020 2021e 2022e 2023e 2024e 2025e 0%
BEAR CASE BASE CASE BULL CASE ~62%
Paid Gamers % of overall gamers ~26%

CY20-25 CAGR of the Paying gamers (mn) 20 ~1.4%

The Average Revenue Per User (ARPU) of the Online Gaming Industry 360 420 480 540 600 660 720 780
paying gamer to increase by just ~4% CAGR.
18 0% 3% 6% 8% 11% 13% 15% 17% Number of transaction based gamers to rise over
393 24 6% 9% 12% 15% 17% 20% 22% 24% the near to medium term.
400
374 30 11% 14% 17% 20% 23% 25% 27% 29%
380
360 348 Monetisation 36 15% 19% 22% 25% 27% 30% 32% 34%
343
334 per gamer per

Lorem Ipsum
340 321 41 18% 22% 25% 28% 31% 33% 35% 38%
month (Rs.)
320 47 21% 25% 28% 31% 34% 37% 39% 42%
300
53 24% 28% 32% 35% 38% 40% 43% 45%
2020 2021e 2022e 2023e 2024e 2025e
59 27% 31% 34% 38% 41% 43% 46% 48%
Monthly ARPU per paid gamer

Source: Nazara Technologies IPO Prospectus, FICCI Data and Spark Capital Page 4
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Indian Gaming market is poised to grow at a ~31% CAGR over the next two years; Online gaming is predominantly played on mobile phones in India
The Indian online gaming market is poised to grow at a ~31% …led by a steady increase in the number of gamers and ARPU Among the sub-categories, we anticipate fantasy sports and
CAGR over the next 5 years… per gamer esports to grow at a higher pace
700 600
350 489
600 esports 35%
500
300 403
500
250 340 400 Fantasy Sports 32%
400 293
200 250 300
300 217 214 600
174 510 560 Indian Gaming Industry 31%
150 293 152 166 450 200
225 200 360 400
100 278 300
173 100 Casual Games 30%
132 100
50 100 145 183
22 30 49 65 77
0 0
0 Real Money Games

2016

2017

2018

2019

2020
29%

2021e

2022e

2023e

2024e

2025e
2021e

2022e

2023e

2024e

2025e
2016

2017

2018

2019

2020

India, Mobile Gamers (mn) Annual ARPU (Rs. ) FY21-25 CAGR

Indian Gaming Industry (Rs.bn)
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

Indian online gaming is a mobile oriented Transaction-based games have gained The increase in mid and hard core gamers is
…with android based devices dominating
market… significant traction in the recent past necessary for monetisation to increase

13% 11% 8% 6%
15% 20% 18% 30
17%
20% 46%
26% 53% 100
31%
35%
80% 82% 10
25
80% 82%
77% 500
72%
63% 47% 54% 5 345
57%
50% 15
20% 18% 100

2017 2018 2019 2020 2018 2020 2025e

2016 2017 2018 2019 2020 2019 2020
Casual gamers Mid core gamers
"iOS" "Android" Transaction Based games Casual Games
Mobile Console Hard core gamers
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

Page 5
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Indian Online Gaming Industry should grow at ~31% CAGR over the medium-term; compelling growth drivers

Gen Z & Millenial Population (mn) Per Capita National Income (Rs.)

FY25e 961 Gamers (mn) ANNUAL ARPU FY25e 210038

~2% (Rs.) ~9%
CAGR ~11% 600 ~18% CAGR
FY20 862 CAGR 48 FY20 135000
CAGR
9
360
214
Smartphone Users (mn) India Avg Per capita spend on Entertainment (Rs.)
FY25e 770 FY25e 4357
~11% FY20 FY25e FY20 FY25e ~12%
CAGR CAGR
FY20 448 FY20 2520

Internet Users (bn) Share of Online Gaming within Entertainment (%)

India Online gaming
FY25e 1.5 market (Rs.bn) FY25e 11.2%
~16% ~120
CAGR bps
FY20 0.70 293 FY20 8.5%
~31%
ARPU
CAGR
Data Consumption (GB per user per month) UPI Transaction volumes (bn)
77
FY25e 42.7 FY25e 59.8
~25% ~68%
CAGR FY20 CAGR
FY20 14.0 FY20 FY25e 12.5

Average mobile Internet Speed (Mb/Second) Real Money Gamers (mn)

FY25e 37.1 FY25e 299
~25% ~26%
CAGR CAGR
FY20 12.16 FY20 100

Gaming App Downloads (bn) Hard and Mid core gamers (mn)
FY25e 20.8 FY25e 130
~18% ~30%
CAGR CAGR
FY20 9.2 FY20 35

Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

Page 6
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230
Trends to watch out for in the Indian Online Gaming market

#1 Video Games have evolved at a rapid

pace in terms of hardware and gaming
details, technology adoption and agility
determines the long term winner

#9 Gamification as a theme is set to gain #2 The challenge for the Indian gaming
pace, industries such as educations, Industry is monetization. Making the
financial services, fitness and retail are freemium users pay-up has been difficult.
using games to engage with consumers. Investments in hardware minimal.

#8 International game titles are popular #3 Online gaming has become a prominent
among the Indian casual segment gamers; part of the Indian entertainment industry,
Increase in hard core gamers should drive should grab a higher share of the overall
monetization over the long term. entertainment spends in the medium term

#7 Esports is a proven business model #4 The lucrative gaming segment from a

globally, with Indian viewers beginning to medium-term perspective are the
catch-up to this trend, prospects for esports transaction-based games, where the
in India is exciting Indian publishers dominate.

#6 Fantasy sports with Cricket as the #5 Real money games offering the
primary underselling proposition has found indigenous Rummy/Teen Patti are the most
immense success in India. Given the high
stickiness, upfront marketing spends galore
Lorem Ipsum lucrative in terms of realisation; publishers in
this segment are the most profitable

Page 7
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#1 Video Games have evolved at a rapid pace in terms of hardware and gaming details, technology adoption and agility determines the long-term winner
In a span of 60 years, the gaming industry has transformed in leaps and bounds; there has been a new leader in every decade; gaming has evolved from being ‘kids entertainment’ to an ‘adult way of life’
2014 2014 2014 2014 2014 2016 2017 2017 2017 2017 2018 2020 ??? ??? ???

Freemium Freemium Facebook acquires Amazon MIXED

Gamergate AUGMENTED Nintendo PlayerUnknown's Fortnite Garena Google Microsoft VIRTUAL EXTENDED
multiplayer Games multiplayer Games VR headset maker Acquires REALITY
controversy REALITY Switch Battlegrounds Freefire Stadia Xcloud REALITY REALITY
- Cross Fire - Clash Of Clans Oculus twitch

2013 2012 2012 2011 2011 2010 2009 2009 2009 2009 2008 2008 2006 2006 2005

MOBILE GAMING
Emotional India's first Candy Disney Skylanders Independent Sony PSP Nintendo Angry Birds on Farmville on World Of Warcraft Activision Nintendo Sony Microsoft
Games Gone Cricket fantasy Crush Saga Infinity AR experiment with game developer Go DSI Mobile Phone Facebook - Most Blizzard WII PS3 XBOX 360
Home App Dream 11 AR emerge downloaded game

1995 1996 1997 1997 1999 2000 2000 2000 2001 2001 2001 2001 2003 2004 2004
32bit HOME
VIDEO
CONTROLLER
(HVC) ERA
Sega exits SONY,
Sony releases Nintendo Grand Resident Sega Dreamcast The Sims Model Sony Releases the HVC Microsoft Nintendo Gameboy Nintendo Tencent Games Sony PS Nintendo MICROSOFT
Halo
PlayStation N64 Theft Auto Evil HVC Strategy Play station 2 market Xbox Advanced gamecube was started Portable DS AND NINTENDO

1994 1992 1992 1991 1991 1990 1989 1988 1987 1987 1987 1986 1986 1985 1985

16bit HOME VIDEO

CONTROLLER
(HVC) ERA
NINTENDO AND Nintendo's Nintendo Home
Warcraft: Orcs Virtua Mortal Sega Sonic the Microsoft Nintendo's Nintendo's Sega Genesis Capcom's Nintendo's Konami's Nintendo's Sega
SEGA Super Mario Entertainment
and Humans Racing Kombat Hedghog Solitaire Super Famicon Gameboy HVC StreetFighter Megaman Contra Legend of Zelda Master Bros for HVC Launched (HVC)
System
1962 1972 1972 1976 1977 1977 1978 1979 1979 1980 1981 1982 1982 1983 1984
ARCADE
GAMES ERA
ATARI AND
Tetris on
Spacewar computer Magnov NINTENDO
Atari Pong Death Race Atari 2600 Nintendo Color Space Invaders Mattel Intellivision Asteroids Game Pac Man on Donkey Kong on Disney Tron on Electronic Arts Sega SG 100 Arcade and
video game. Arcade Odyssey (HVC) Arcade game (HVC) TV (HVC) on Arcade HVC launched on Arcade Arcade and HVC Arcade and HVC Arcade and HVC established (HVC) HVC
HVC – Home Video Controller Source: Netflix Documentary – ‘High Score’, Industry Data, Media Reports and Spark Capital Page 8
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#1 Video Games have evolved at a rapid pace in terms of hardware and gaming details, technology adoption and agility determines the long-term winner

Analysing the Google play store data for the past 5 years, we see that there has been 32 distinct However, there has been only 21 games out of the total 50 in terms of top 10 revenue
games out of the total 50 (top 10 games* 5 years). Only Subway Surfers has been consistently generating applications in the google play store. Candy Crush Saga, Monster Strike, Fate,
on the top 10 for the past 5 years. Free Fire and PUBG among the top 10 ever since their launch. Pokeman Go and Westward Journey have been consistently in the top 10 charts.
Game Number of times in Top 10 downloads over the past 5 years Number of times in Top 10 revenue generating applications over
Game
Subway Surfers 5 the past 5 years
Candy Crush Saga 3 Candy Crush Saga 5
Garena Freefire 3
My Talking Tom 3 Monster strike 5
PUBG 3 Fate/Grand Order 4
Clash of Clans 2
Clash Royale 2 Pokemon Go 4
Helix Jump 2 West Ward journey 4
Piano Tiles 2 2
Sniper 3D 2 Clash of Clans 3
Slither 2 Clash Royale 3
8 Ball pool 1
Among US 1 Arena of Valor 2
Brain Out 1 DBZ Dokkan Battle 2
Brawl stars 1
Color Bump 3D 1 Game of war 2
Color Switch 1 Honor of Kings 2
GardenScapes 1
Happy Glass 1 Lineage M 2
Homescapes 1 PUBG 2
Honor of Kings 1
Hunter Assasin 1 Puzzle and Dragons 2
Kick The Buddy 1 Clash of Kings 1
Love Balls 1
Ludo King 1 Coin Master 1
My Talking Tom 2 1 GardenScapes 1
Paper.Io 2 1
Pokemon Go 1 Lineage 2 1
Rise up 1 Mobile strike 1
Super mario run 1
Tiles Hop 1 Puzzle & Dragons 1
Traffic Rider 1 Rise of Kingdoms 1
Roblox 1

Source: Global Google Play data and Spark Capital Source: Global Google Play data and Spark Capital

Page 9
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#2 The challenge for the Indian gaming industry is monetization. Making the freemium users to pay has been difficult. Investments in hardware minimal.
Indian online gaming market is only ~2% of the global market In comparison with China and USA, the ARPU in India is The comparison between the Indian gaming market of 2020 and
despite boasting of ~16% of the user base due to a weak ARPU significantly inferior the Chinese market of 2012 is inexact due to the difference in
per capita GDP.
650 235 30 15000
16% 700 250
9982 1021810499
14% 600 8883
200 20 7105 7657 7996 8151 10000
500 5617 6321
400 360 150 10 5000
2035 2140
300 100
66 0 0
200 166
3%
2% 50
100
3
0 0
Number of Users Downloads Value Market Game Publishers China USA India Chinese Mobile Gaming Industry (USD bn)
on Playstore India Mobile Gaming Industry (USD bn)
India in the Global Gaming Industry Online Gamers (USD mn) ARPU (USD) Chinese GDP Per Capita (USD)
Indian GDP Per Capita (USD)
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, IMF data and Spark Capital

Indian online gaming happens predominantly only on the With Gen Z being accustomed to online gaming, media spends The paying gamer is already spending ~50USD per year in India,
mobile phones as against other countries where hardware over the long-term could divert into the online gaming segment. overall ARPU growth to be driven by increase in number of
investments are exclusively made for gaming purposes paying gamers.

Indian Online Gaming Market (Rs bn) 77

USA 15% 58% 28% 37% 35% Advertisement Revenues (%) 6%

49%
64% Subscription Revenues (%) 94%

China 31% 30% Total Suscription Revenues (Rs.bn) 72

34% 4% 62%
25%
Gamers in India 360
25%
32% 35% Paying Gamers 20
India 3% 9% 88% 26%
11% Overall ARPU per annum (Rs.) 201
Global USA India China Paying Gamers ARPU per annum (Rs.) 3619
Personal Computer Console Mobile
Gen Z Millenials Others
Source: Nazara Technologies IPO Prospectus and Spark Capital Source: Nazara Technologies IPO Prospectus and Spark Capital Source: Nazara Technologies IPO Prospectus and Spark Capital
Page 10
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#3 Online gaming has become a prominent part of the entertainment industry; should grab a higher share of the overall spends over the medium-term
Online gaming has become ~6% of the Indian media and Entertainment industry from Online gaming has been forecasted to grow the Currently television and movies take away ~86% of the
being just ~2% a decade ago. fastest from an FY19-23 perspective . consumer spend (subscription) on entertainment

2% 2% 2% 2% 2% 2% 2% 3% 3% 4% 6% 18%
9% 10% 9% 9% 9% 9% 10% Digital media
2% 10% 10% 10% 7% 37%
2% 3% 3% 4% 5% 6%
13% 13% 8% 11% 13%
14% 14% 12% 12% 11% 17%
11% Online gaming 24%
11% 11% 5% 23%
30% 29% 27% 26% 26% 25% 24% 21% 14%
19% 17%
Movies 6%
-1%

50%
46% 45% 45% 45% 46% 47% 47% 47% 46% 45% Print -3%
0%

Television 2%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 9%

Television Print Filmed entertainment Digital media Others Online gaming 2019-23e CAGR 2010-20 CAGR
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

The biggest advantage for online gaming is the average age of its The incremental spend on online gaming will be from the television The time spent on gaming has increased post Covid-19 lockdown as
users. As the users enter the working-age population, the spend on and the movie segments. The lockdown over the past 15 months several of the casual gamers migrated to being serious gamers
this segment could see an explosion as has been historically has witnessed movie spend being diverted to online gaming.
45 witnessed across movies and television spends. Percentage of Gamers by number of hours spent on gaming
Advertisement Revenue Subscription Revenue
40 share (%) share (%)
35 18%
Television 37% 63% 26%
37%
30
Print 64% 36%
25
Filmed entertainment 15% 85%
20
Radio 100% 0% 82%
15 74%
63%
10 Online Music 95% 5%
5 Online gaming 6% 94%
0 Digital media 82% 18% Pre Covid -19 During Covid-19 Post COVID -19
Online Online Digital Movies Television Radio Print
gaming Music media Television 37% 63%
Serious Games Casual Gamers
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

Page 11
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#4 The lucrative gaming segment from a medium-term perspective is the transaction-based games, where the Indian publishers dominate.

INDIAN GAMING INDUSTRY (Rs.77bn)

Transaction Based Gaming (~82%) Casual Games (~18%)

Real Money Games (~46) Fantasy Sports (~41%) Esports (~13%) In-App Purchases (~65%) Advertisements (~35%)

Skill-based card games Fantasy sport Esports Features Casual gaming Online games of chance
Competitive Competitive Competitive Objective / Intent of play Entertainment Competitive
No Yes During tournaments Real world physical connect No No
No No Yes Physical monitoring of game play No No
Yes Yes Yes Use of skill Yes No
Yes No Yes Are tournaments an integral part No No
No No Yes / No Venue No No
PC, mobile, laptop, tablet, console, etc. Physical + device Device Infrastructure PC, mobile, laptop, tablet, console, etc.

Real Money Poker/Rummy Fantasy Sports Key esports Organisers Multi games real money platform By Downloads By MAUs By Consumer Spend
Rummy Circle Dream 11 Nazara Technologies MPL Ludo King Ludo King Free Fire
Ace2three My Team 11 Usports Paytm First Games Carrom Pool PUBG Mobile PUBG Mobile
Junglee Rummy My 11 Circle Gaming Monk Winzo Hunter Assassin Free Fire Coin Master
Rummy Millionaire Hala Play Gamerji Nostra Pro Free Fire Candy Crush Saga Teen Patti
Rummy Culture Howzat Sostronk BalleBaazi Bubble shooter by Iiyon Carrom Pool Clash of Clans
TOP 10 GAMES
Khelplay Rummy FanFight PUBG Mobile Subway Surfers Call of Duty: Mobile
Classic Rummy 11 Wickets Subway Surfers Bubble shooter by Iiyon Teen Patti Gold
Indian Game Publishers Subway Princess Runner Hunter Assassin Lords Mobile
Asli Rummy Ballebaazi
Adda52 Poker Fanmojo Fantasy Temple Run 2 Callbreak Multiplayer Candy Crush Saga
Adda52 Rummy Real 11 Hill Climb Racing Temple Run 2 Gardenscapes

Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Click here to view the top Indian game publishers and their portfolio of games
Page 12
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#4 The lucrative gaming segment from a medium-term perspective is the transaction-based games, where the Indian publishers dominate.

TOP REAL MONEY GAMES (RMG) GAME DEVELOPERS MOBILE SERVICE PROVIDERS
USERS

Total Population: ~1.4bn

TOP FANTASY GAMES Gen Z & Millennial

population: ~0.86bn
(~62% of the population)

RMG MULTI GAMING PLATFORM Number of Smart Phones:

APPLICATIONS ~0.5bn
(~32% of the population)
E-SPORTS ORGANISERS

Number of Mobile
Gamers: ~0.32bn
POPULAR GAME PUBLISHERS* (~23% of the population)
SPORTA
TECHNOLOGIES
Number of Paying
gamers: ~0.02bn
TOP GROSSING CASUAL GAMES
GARWARE (~1.4% of the
FUNTECH population)
APPLICATION STORE

PAYMENT NETWORKS

GAME / GAME CODING

PURCHASES

PAYMENTS POST FEES

REVENUE SHARE

*several of them develop in-house games Click here to view the top Indian game publishers and their portfolio of games
Source: Industry Data and Spark Capital Page 13
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Real money games offering the indigenous Rummy/Teen Patti are lucrative in terms of realisation; publishers in this segment are the most profitable

These are games that are played competitively among users for Rummy is the most common Real Money Game (RMG) in India 13 Factors that determine which app the user chooses among
real money. The competition can either be one-on-one or as it is easy and indigenous the available options
among a group. Card games like rummy and poker are popular 1. Number of Users
among Indian users. The users have the option to either play 2. Play store/App Store Ratings
the games free or a pay basis. These games are predominantly 3. Advertisements/Popularity
played on mobile devices. These games work on a pay-to-play
model and the game publishers monetise through the game 4. Service Charges
publishers platform fee charged from the users. Rummy/Poker, 5. Prize money Pool
Others, 4%
96% 6. Bonus Coins
7. Immediate settlement
TOP REAL MONEY GAMES (RMG)
8. Trustworthy Payment System
9. Fair Play certifications
10. Seamless connectivity

11. Friendly User Interface

12. Regional Language Compatibility
13. Variety of games offered
Source: Industry data, IAMAI Report and Spark Capital Source: FICCI and Spark Capital Source: Industry Data, Spark Capital

We anticipate the number of users to increase at a ~20% CAGR

The regulatory interreference on this segment should continue over the foreseeable future.
over the next 5 year leading to an overall growth of ~29%.
Year of
State Fantasy Gaming Rummy Poker Act
Real Money Games 2020 2025e CAGR enactment
Tamil Nadu Not allowed Not allowed Not allowed Draft NA
Real Money Games Revenues (Rs.bn) 29 104 29%
Amendment to the AP Gaming Act
Andhra Pradesh Not allowed Not allowed Not allowed 2020
1974
Average Commission (~) 15% 15%
Amendment to the Telangana
Telangana Not allowed Not allowed Not allowed 2017
Gross Transaction Value (Rs.bn) 193 691 29% Gaming Act of 1974
Amendment to the Gujarat
Gujarat Allowed Allowed Not allowed 2016
Real Money Game Users (mn) 40 103 21% Prevention of Gambling Act, 1887
Nagaland License needs to be obtained License needs to be obtained License needs to be obtained Online Games of Skill Act 2016
% of paying users (~) 12% 14%
Sikkim Restricted to servers in Sikkim Restricted to servers in Sikkim Restricted to servers in Sikkim Sikkim Online Gaming Act 2009
Number of Paying Users (mn) 5 14 24% Assam Not allowed Not allowed Not allowed Assam Game and Betting Act 1970
Odisha Not allowed Not allowed Not allowed Orissa Prevention of Gambling Act 1955
Spend Per person per month (Rs.) 3384 4112 4%
Meghalaya License required License required License required Ordinance -
Source: FICCI and Spark Capital Source: FICCI and Spark Capital Click here to view the top RMG game
publishers and their financials (Appendix)
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Fantasy sports with Cricket as the primary proposition has found immense success in India. Given the high stickiness, upfront marketing spends galore

Fantasy sports are a digital sports engagement platform - an Fantasy sports has predominantly been only about cricket in 11+1 Factors that determine which app the user chooses among
extension of a sports enthusiast’s engagement with the traditional India the available options
sport. Typically, a user prepares a virtual team of players
scheduled to perform in a real-world sport. Each user builds her Pioneer
own unique team and lists it on the platform. Based on the Advertisements/ Brand
advantage as
statistical performance of each real-world player, the user with Publicity Ambassadors
stickiness is high
the most ideal virtual team wins. Sports knowledge, research and
skill is crucial in team creation and in player selection. Variety of game
Prize Money Analytics/Tips
options
TOP FANTASY SPORTS APPLICATIONS
Presence of
Easy user Real Time
friends and
Interface Updates
influencers/

Payment Fairness of the Seamless

settlement game Connectivity

Source: Industry data, IAMAI Report and Spark Capital Source: FICCI and Spark Capital Source: Industry interactions, Spark Capital

The fantasy sports segment in India is anticipated to grow at a The sector currently is the least profitable among the Indian gaming industry due to several publishers taking on high upfront Customer
~32% CAGR over the next 5 years Acquisition Cost (CAC)
Users Revenues EBITDA A&P as a % of
Fantasy Sports 2020 2025e CAGR Fantasy Sports Apps Publisher A&P (Rs.mn) Brand Ambassador(s)
(Mn) (Rs.mn) (Rs.mn) sales
Fantasy Sports Revenues (Rs.bn) 26 103 32% Dream 11 100 Sporta Tech Pvt Ltd 7,755 -1,566 7,851 ~101% MS Dhoni
MPL 60 Galactus Funware Tech 182 -2,976 1,397 ~768% Virat Kohli
Average Commission (~) 15% 15%
Paytm First games 45 Paytm 170 -999 358 ~210% Sachin Tendulkar
Gross Transaction Value (Rs.bn) 173 685 My Team 11 18 My Team 11 Fantasy sports 253 -48 198 78% Virender Sehwag
My 11 Circle 17 Play Games 24 X 7 14,177 4,641 5,081 36% Sourav Ganguly
Fantasy Sports Users (mn) 90 224 20%
HalaPlay 10 Nazara Tech 397 -308 67 17% Hardik & Krunal Pandya
% of paying users (~) 20% 25% Nostra Pro 8 Gambit Sports 49 -86 14 29% NA
Number of Paying Users (mn) 18 56 25% Howzat 7 Junglee Games 3,347 885 1,664 50% Yuvaraj Singh, Irfan Pathan, Pollard,
FanFight 6 Head Digital works 5,998 1,138 4,087 68% NA
Spend Per person per month (Rs.) 802 1024 5%
11 Wickets 4 Ability Games 26 -166 134 ~526% Sunny Leone

Source: FICCI and Spark Capital Source: RoC filings, company websites and Spark Capital Click here to view the top Fantasy Sports game
publishers and their financials (Appendix)
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 esports is a proven business model globally, with Indian viewers beginning to catch up to this trend; prospects for esports in India are exciting
What are esports Esports should be the fastest growing subsegment among The Indian market is just ~11% of the global market, offers a
online games in India huge head room for growth over the medium-term.
➢ Esports refers to the category of sports that are played electronically.
They are played in competitive settings between individuals or teams 36 35
and require rigorous physical and mental training, and motor skills. 32
The gameplay is serious, intense, fast-paced, multi-functional and is 27 Others, 52%
generally tied to the rules of the game 28
24 21
➢ Any digital game that tests a user’s speed, reaction time, and other
20 China, 38%
skills on a device fits the mould of esports. Generally understood 15
genres of esports include: first-person shooter, real-time strategy, 16
massively multiplayer online battle arena, and battle royale games. 12 10
7 8 India, 11%
➢ While smartphones are the most preferred method of playing esports, 8
a sizeable number of players use gaming consoles and wearable 4
devices like Virtual Reality (“VR”) head-sets, game bands, gaming 0 Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital
goggles, and AR glasses. 2019 2020 2021e 2022e 2023e 2024e 2025e
➢ Esports players across age groups are: 18-24 years (~41%); 25-36 6 out of the top 15 prize money for individual sports category
years (~52%); and above 37 years (~7%) esports (Rs.bn)
were from esports.
Source: Industry data, IAMAI Report and Spark Capital Source: FICCI and Spark Capital Winnings
Name (USD mn) Game Event
The revenue stream for Indian and International esports market On a global scale, ~24% gamers are esports audience as against Rory Mcllroy 15 Golf FedEx Cup
hinges on the media rights. just ~5% in India, iterating the underlying opportunity. Hossein Ensan 10 Poker World Series of Poker
Rafael Nadal 3.85 Tennis US Open
23.6% Topias "Topson" Taavitsainen 3.1 Dota 2 The International
15% 22.0%
20.5% Sebastien "Ceb" Debs 3.1 Dota 3 The International
30% 9% 18.3%
5% Johan "N0tail" Sundstein 3.1 Dota 4 The International
Anathan "Ana" Pham 3.1 Dota 5 The International
19% Jesse "JerAx" Vainikka 3.1 Dota 6 The International
Kyle "Bugha" Giersdorf 3.0 Fortnite Fortnite World Cup
59%
4.3% 4.7% Novak Djokovic 3.0 Tennis Wimbledon
3.3% 3.2%
Simon Pagenaud 2.6 Racing Indy 500
55% Tiger Woods 2.0 Golf The Masters
2017 2018 2019 2020 Denny Hamlin 1.5 Racing Daytona
Advertisement & Sponsorship Media Rights Michael Van Gerwen 0.6 Darts PDC Championship
esports Audience % of indian gamers
Merchandise & Tickets Game Publisher Fee esports Audience % of global gamers Egan Bernal 0.55 Cycling Tour De France
Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 esports is a proven business model globally, with Indian viewers beginning to catch up to this trend; prospects for esports in India is exciting
‘esports’ eco-system in India
Game publishers make licenses available to eSports As eSports popularity is fast growing as a spectator
companies to help promote professional competition sport, it is attracting the millennial audience, which
is difficult to target through traditional advertising.

In-Game Spending

Game
Publishers Gamers
Media Content

Live Events

Organisation Fees Merchandise and Tickets

Gaming Platforms

Online Channels Advertising & Sponsorships

Organised Leagues

Esports Companies
Media
Distribution Corporates
These companies have been a vital driver for monetizing the increasing interest in the online gaming landscape.
On an on-going basis, eSports companies host regular leagues and tournaments where professional players
With growing popularity of eSports, media companies compete for large prize pools and offer an opportunity for spectators to engage holistically. These companies Advertisers and brands partner with eSports events to
and online platforms have started showcasing eSports provide infrastructure for players to compete effectively, including a connected gaming platform, licensing leverage highly engaged millennial and Gen Z
content on sports and music channels and platforms agreements with publishers and event management to host online and offline events, and also engage with audiences to enhance brand value and create
like YouTube and Twitch. publishers to evangelize their eSports titles and with sponsors to execute marketing activation campaigns. monetization avenues for all stakeholders.

Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 esports is a proven business model globally, with Indian viewers beginning to catch up to this trend; prospects for esports in India is exciting
The Indian esports market across parameters has increased ~5x Among all the sub-categories of online gaming, esports is the The number of channels, which have commenced telecasting
in the past 3 years and is all set to grow ~3.5x in the next 5 only one where monetization is not dependent on increase in esports in India, has increased ~3x in 2 years
years the gamer spends
2019 2020 2021
2018 2019 2020 Increase 100% YouTube YouTube YouTube
Facebook Facebook Facebook
Esports audience (mn) 9 13 17 3x 80% Hotstar Hotstar Hotstar
Voot Voot Voot
Esports teams 2000 16000 60000 30x
60% Twitch Twitch Twitch
Esports players 20000 80000 150000 7.5x Sony Liv Sony Liv Sony Liv
40% MX Player MX Player
International esports teams in India 1 3 5 5x MTV MTV
20% Loco
Women Audience 2% 5% 12% 6x Rooter
0%
Prominent esports Game titles (mobile Paytm First Games
1 6 9 9x Real Money Fantasy Sports Casual Games esports
+ PC + console Nimo Tv
Games
Airtel
Prize money (mn) >30 >80 >150 5x Subscription/Others Advertisement/Sponsorships/Media Rights Rheo Tv
Source: FICCI and Spark Capital Source: FICCI and Spark Capital Source: FICCI and Spark Capital

From a user perspective, esports could provide for the much- From a publisher perspective, esports encourages in-app The Olympic Virtual Series of esports which is to be held just before
needed alternative to cricket viewership in India purchases and the popularity of their games the Tokyo Olympics, could increase the popularity of esports
90% 90% 90% 90%
80% 80%

➢ “The International Olympic Committee (IOC) will partner with five

International Sports Federations (IFs) and game publishers to
produce the Olympic Virtual Series (OVS), the first-ever, Olympic-
licensed event for physical and non-physical virtual sports.
➢ Taking place ahead of the Olympic Games Tokyo 2020, the OVS will
begin on 13 May, continuing through to 23 June 2021. The Olympic
Virtual Series will mobilise virtual sport, esports and gaming
2019 2020 2019 2020 2019 2020 enthusiasts all around the world in order to reach new Olympic
audiences, while also encouraging the development of physical and
Downloads MAU Revenue non-physical forms of sports in line with the recommendations of the
International Publisher games in top 10 (%) IOC’s Olympic Agenda 2020+5.”

Source: FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: IOC press release and Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#8 International games are popular among the Indian casual segment gamers; Increase in hard core gamers should drive monetization over the long-term.
What are casual games Casual Games are anticipated to grow at a ~30% CAGR over the The number of paid gamers expected to increase ~3x from
next 5 years led by increase in paid gamers ~20mn currently to ~68mn over the three years.
➢ Casual games are played for fun, relaxation and recreation. Typically
developed for mass audiences, they have a simple, easy-to- 55 600 1.4%
understand gameplay. They do not require uninterrupted focus and 1.2%
can be played during work breaks or commute. 500 1.1% 1.2%
45 1.0%
➢ Casual game genres are action, arcade, board, card, educational, 0.9% 1.0%
35 400 0.8%
music, puzzle, racing, role-playing, simulation, social, sports, strategy,
0.6% 0.8%
trivia and wordplay. 300
25 51 564
504 0.6%
➢ Most casual games operate on a free or freemium model, while some 39 450
require an upfront payment before users can play. Game developers 200 401
15 30 320 358 0.4%
monetize casual games through advertisements and in-app purchases 23
14 18 100 0.2%
(“IAPs”) offered to users 5 13
➢ Casual games in the board, puzzle, quiz, and trivia genres test a 0 0.0%
user’s analytical skills and general knowledge. Many casual games -5 2019 2020 2021e 2022e 2023e 2024e 2025e 2020 2021e 2022e 2023e 2024e 2025e
are multiplayer games that can be played with friends, family, and
peer groups Casual Games (Rs.bn) Casual Gamers (mn) % of paying gamers
Source: Industry data, IAMAI Report and Spark Capital Source: FICCI and Spark Capital Source: FICCI and Spark Capital

The preferred games are migrating towards action with increasing The increase in number of mid and hard core gamers is a key The IAP which is ~65% of the overall revenues should increase
popularity of games such as PUBG, Freefire and Call of Duty driver of In-App purchases (IAP) to ~75% as number of paid subscribers increase
Puzzle 37% 700

Action 30% 600 30

Adventure 26% 500 65%

75%
Arcade 23% 400
10
500
Racing 22% 300

Sports 18% 200 345 35%

25%
Skill Based 14% 100 5
100 100
Strategy 12% 0 15 25 2020 2025e
2018 2020 2025e
Chance Based 7% Advertisements In-App Purchases
Mid core Casual Hard core
Source: Company Filings, Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital Source: Nazara Technologies IPO Prospectus, FICCI and Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#8 International games are popular among the Indian casual segment gamers; Increase in hard core gamers should drive monetization over the long-term.
Top 10 by DOWNLOADS
2020 2019
Game Publisher Country of the publisher Genre Game Publisher Country of the publisher Genre
Ludo King Gametion India Board Ludo King Gametion India Board
Carrom Pool Miniclip, Tencent China Board PUBG Mobile Tencent China Action
Hunter Assassin Ruby Games Turkey Action Free Fire Sea Singapore Action
Free Fire Sea Singapore Action Subway Surfers Sybo Denmark Arcade
Bubble shooter by Iiyon Miniclip, Tencent China Casual Carrom Pool Miniclip, Tencent China Board
PUBG Mobile Tencent China Action Bubble Shooter by Llyon Miniclip, Tencent China Casual
Subway Surfers Sybo Denmark Arcade Temple Run 2 Imangi USA Action
Subway Princess Runner Ivy Mobilegames USA Action Candy Crush Saga Activision Blizzard USA Casual
Temple Run 2 Imangi USA Action Hill Climb Racing Fingersoft Finland Racing
Hill Climb Racing Fingersoft Finland Racing Temple Run Imangi USA Arcade
Top 10 by MONTHLY ACTIVE USERS (MAU)
2020 2019
Game Publisher Country of the publisher Genre Game Publisher Country of the publisher Genre
Ludo King Gametion India Board PUBG Mobile Tencent China Action
PUBG Mobile Tencent China Action Racing Fever: Moto Gameguru USA Racing
Free Fire Sea Singapore Action Ludo King Gametion India Board
Candy Crush Saga Activision Blizzard USA Casual Candy Crush Saga Activision Blizzard USA Casual
Carrom Pool Activision Blizzard USA Board Subway Surfers Sybo Denmark Arcade
Subway Surfers Sybo Denmark Arcade Free Fire Sea Singapore Action
Bubble shooter by Iiyon Miniclip, Tencent China Casual Clash of Clans Supercell, Tencent China Strategy
Hunter Assassin Ruby Games Turkey Action Doodle Army 2: Mini militia Miniclip, Tencent China Action
Callbreak Multiplayer Teslatech Nepal Card Carrom Pool Miniclip, Tencent China Board
Temple Run 2 Imangi USA Action 8 Ball Pool Miniclip, Tencent China Sports
Top 10 by CONSUMER SPEND
2020 2019
Game Publisher Country of the publisher Genre Game Publisher Country of the publisher Genre
Free Fire Sea Singapore Action PUBG Mobile Tencent China Action
PUBG Mobile Tencent China Action Free Fire Sea Singapore Action
Coin Master Moon Active Israel Adventure Coin Master Moon Active Israel Casual
Teen Patti Octro India Casino Teen Patti Octro India Casino
Clash of Clans Supercell China Strategy Candy Crush Saga Activision Blizzard USA Casual
Call of Duty: Mobile Activision USA Action Lords Mobile Fantasy Plus China Strategy
Teen Patti Gold Moonfrog India Casino Clash of Clans Supercell China Strategy
Lords Mobile IGG China Strategy Teen Patti Gold Moonfrog India Casino
Candy Crush Saga Activision Blizzard USA Casual Mobile Legends: Bang Bang Moonton China Action
Gardenscapes – New Acres Playrix Ireland Puzzle 8 Ball Pool Miniclip, Tencent China Sports
Click here to view the top Indian casual game publishers (Appendix) Page 20
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#9 Gamification as a theme is set to gain pace; industries such as educations, financial services and retail are using games to engage with consumers.
Gamified Early learning has witnessed a lot of interests and investments especially in the developed nations. We expect the same to spread to fitness and finance shortly. Several other sectors use gaming as a
marketing tool to attract and retain consumers.

FINANCE
EDUCATION
AUTOMOTIVE

fI
E-COMMERCE
FITNESS

TOURISM
FOOD,
PERSONAL CARE
HEALTHCARE

FOOD RETAIL MOVIES

Page 21
Nazara Technologies – Let the Games begin!

Page 22
 NAZARA TECHNOLOGIES – Initiating Coverage CMP Target Price Rating
Rs. 1510 Rs. 2230 BUY
Let the Games begin!
We initiate coverage on Nazara Technologies (Nazara) with a BUY rating and a Target Price of Rs. 2230. Since its inception in 1999, Nazara has undergone several transformations INITIATING COVERAGE
and donned different hats to adapt itself to the changing needs of the gaming industry by altering its business model. The gaming industry revolution should gain further
02 July 2021
momentum with technological advancements making it difficult to predict which sub-sector within the gaming to bet on. In our opinion, Nazara currently boasts of an enviable
business model which can alter itself to the changing needs of the gaming industry, making it the best proxy to play the underlying gaming sector growth. Industry MEDIA
We Like the Nazara business model for the following reasons: (1) The current asset-light ‘holding’ structure keeps the company agile to changing needs of the gaming industry as it Key Stock Data
can change its course of operations by acquisitions/dispositions. With good cash reserves and promoters willing to dilute stake, we believe the current business model comprises Bloomberg NAZARA IN
several ‘unknown’ growth drivers. (2) With Nazara taking just the minimum stake required for ownership of its subsidiaries and letting the erstwhile promoters run the operations,
Shares o/s 30mn
the company has developed a win-win business model for all stakeholders. Unlike several other game publishing companies who adopt upfront loading of customer acquisition
costs, we see the vastly experienced Nazara management being more rational in its thought process and maintaining a fine balance between EBITDA & revenue growth. (3) The Market Cap Rs. 47bn ($1bn)
underlying growth across its key categories of gamified early learning market in the USA, esports market in India, freemium market in India and fantasy sports market in India should 52-wk High-Low Rs.2,027-1,413
be at least 30%+. Currently, Nazara has a minuscule market share across these segments (except esports in India). Further, the geographical expansion opportunities galore. (4) With 3m ADV Rs.717mn ($10mn)
the Lifetime Customer Value (LTV) set to explode as the engagement time with the gamer increases and with Customer Acquisition Cost (CAC) trickling down post reaching a Index NA
substantial number of installations, operating leverage should be visible over the medium-term especially in gamified early learning & freemium segments.
F&O NO
Nearly 85% of its profits should be converted into Free Cash Flow (FCF) as the business model calls for minimal accruing capital investments, enabling the company to add Rs.3.5bn
to its cash reserves in the next 5 years. In comparison with other digital companies in India or international gaming peers, Nazara would seem costly on PEG ratio basis. However, Latest Shareholding (%)
factoring in for the ‘option’ value of potential non-linear growth drivers that can emerge and the underlying business model strengths, we believe the stock promises a significant Sep 20 Dec 20 Mar 21
upside. Given the holding structure of the company and lack of peers to evaluate on a SOTP basis, we have used Discounted Cash Flow methodology to arrive at our TP: Rs. 2230. Promoters - - 20.7%
Gamified Early learning: Nazara, through its Kiddopia application, has less than 1% share in the US gamified early learning market which is forecasted to grow at ~47% CAGR over the Institutions - - 14.1%
next 3 years. Kiddopia, ever since changing its business model to subscription-based service, has been witnessing a healthy traction, indicated by the rising popularity of its
Public - - 65.2%
downloads/grossing rankings across platform operators. Geographical expansion, coupled with improving profitability are key growth monitorables.
Pledge - - 0%
Esports: Nodwin Gaming, the esports subsidiary of Nazara, should witness a healthy traction led by the underlying growth of the esports market in India, the launch of Battlegrounds
mobile India and the easing of lockdown restriction on conducting esports tournaments. The long-standing experience of the Nodwin management, possession of premium Intellectual Stock Performance (%)
Properties (IPs) across all levels, liaison with broadcasting and advertising companies, Krafton as an investment partner in Nodwin Gaming, and the strong recall among the gamer
1m 3m 12m
network should enable Nodwin Gaming to further consolidate its market leadership in this segment despite rising competition
Sports Website: Sportskeeda is the third most popular digital sports website in India with content (video, audio and text) across several sports other than only Cricket. Banking on its NAZARA -9% -8% NA
unconventional formats for attracting viewers and its revenue-sharing content development model, the website should benefit from Indian viewers’ rising interest in other sports. We Sensex 1% 5% 48%
anticipate the revenue growth to be aided by rise in digital media spends in India. The business model should ensure operating margin expansion albeit at a slower pace from hereon.
Freemium: The freemium business for Nazara, operated largely through its subsidiary Next Wave Technologies, has been predominantly about Cricket-based sports simulation casual RESEARCH ANALYSTS
games. The much elusive In-App Purchases (IAP) has been gaining momentum off-late with several monetisation tweaks and the launch of World Cricket Championship 3. As the CAC is
rangebound, improvement in customer LTV should lead to operating leverage. The potential of a Cricket based esports tournament is exciting but is sometime away. GNANASUNDAR
Others: The prospects of the fantasy sports business, Halaplay is limited as the management is recalibrating its approach in this segment given the hefty upfront loading costs that its [email protected]
competitors are engaging. The Telco business should be on a structural downtrend as consumers migrate away from the value-added services provided by telecom operators. +91 44 43440062
Triggers: The launch of Battlegrounds mobile in India, Krafton Inc valuations in its upcoming IPO, resumption of the cricket season in India, new acquisitions by Nazara, regulatory
updates on the gaming industry by the central/state governments and competitive intensity in the esports segment.
Risks: Adverse government regulations, rising competitive intensity in the underlying segments, Nazara’s inability to find suitable acquisitions at reasonable valuations, the
founder/promoter of the subsidiaries seeking an immediate exit and changing privacy rules by the platform application stores.
find SPARK RESEARCH on Bloomberg [RESP SPAK <go>] | FACTSET | REFINITIV EIKON Page 23
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Factsheet
▪ Nazara Technologies is a diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America, and
Company Background offerings across the interactive gaming, eSports and gamified early learning ecosystems including World Cricket Championship (WCC) and CarromClash in mobile games, Kiddopia in
gamified early learning, Nodwin Gaming and Sportskeeda in eSports and eSports media, and Halaplay and Qunami in skill-based, fantasy and trivia games.

▪ The promoters of the company hold ~20.4% shares of the company. The promoter group comprises of Mitter Infotech (17.03%), Mr.Vikash Mittersain and Mr.Nitish Mittersain. Mitter
Promoter Background
Infotech shareholding is as follows: Mr. Vikash Mittersain (~10.1%), Mr. Nitish Mittersain (~2.6%) and Ms.Sandhya Mittersain (~87.3%)

▪ Mr. Nitish Mittersain (Joint MD, Nazara), Mr. Manish Agarwal (Group CEO, Nazara), Mr.Anupam Dhanuka (Co-founder and CEO, Paperboat Apps), Ms. Anshu Dhanuka (Co-founder & CPO,
Leadership Team Paperboat Apps), Mr. Akshat Rathee (Co-founder & ED, Nodwin Gaming), Mr. Porush Jain (Founder and CEO, Absolute Sports), Mr. Rajendran Poochi Ramasamy (Co-founder & CEO, Next
Wave), Ms. Jayashree Poochi Ramaswamy (Co-founder and COO, Next Wave), Mr. Rakesh Shah (Group CFO) and Mr. Savio Saldanha (CEO, Nazara Digital (Telco Subscription))

▪ Chairman & MD - Mr. Vikash Mittersain; Joint MD - Mr. Nitish Mittersain; Non- Executive & Independent Directors – Ms. Shobha Jagtiani, Mr.Probir Roy, Mr. Sasha Mirchandani,
Board Of Directors
Mr.Kuldeep Jain, Nominee Director of Rare Enterprises - Mr.Rajeev Agarwal,

▪ Gamified Early Learning (~39% of revenues), esports (~37% of revenues), Freemium (~4% of revenues), Telco Subscription (~17% of revenues), Skill Based, Fantasy Sports and Trivia real
Key Product Segments (FY21)
money gaming (~3% of revenues)
Key Geography (FY21) ▪ India (~41% of revenues), Middle East (~6% of revenues), Africa (~3% of revenues), APAC/ROW (~8% of revenues), North America (~42% of revenues)
▪ Subscription (~59% of revenues), Platform Fees(~3% of revenues), Advertising (~9% of revenues), In-app sales (~3% of revenues), Brand sponsorship and media rights licensing (~26% of
Revenue by Type (1HFY21)
revenues)
▪ Kiddopia (Gamified e-learning), HalaPlay (Fantasy Sports), Qunami (Real Money quizzing), WCC Rivals, Carrom Clash (Real Money games), World Cricket Championship (WCC), WCC 2,
Prominent Applications
WCC 3, Beach Cricket, Real Carrom, World Table Tennis Champs and Battle of Chepauk 2 (Freemium) and Sportskeeda (Sports Website)
▪ Nazara Technologies has 18 subsidiaries - Direct Subsidiaries (9) - Nazara Technologies FZ LLC, Nazara Pte Limited, Nazara Pro Gaming Private Limited, Nextwave Multimedia Private
Limited, Nodwin Gaming Private Limited, Absolute Sports Private Limited, Paperboat Apps Private Limited, Crimzoncode Technologies Private Limited, Halaplay Technologies Private
Corporate Structure Limited. Stepdown subsidiaries (9) - Nazara Technologies, Nodwin Gaming International Limited, Nazara Zambia Ltd, NZMobile Nigeria Ltd, NZ Mobile Kenya Ltd, Nazara Uganda Ltd, NZ
World Kenya Limited, Nazara Bangladesh Limited, Kiddopia USA, INC. Associate Companies (2) - Moong Labs Technologies Private Limited, Mastermind Sports Limited and Joint Venture
(1) - Sports Unity Private Limited.
▪ Promoter & Promoter Group – 20.4%, Mr. Arpit Khandelwal – 11.32%, Mr. Rakesh Jhunjhunwala – 10.8%, Plutus Wealth Management Llp – 6.57%, Instant Growth Limited – 3.8%,
Major Holders
Deutsche Bank A.G. – 2.6%

IPO Size ▪ Nazara Technologies stock was listed on the stock exchanges on March 30, 2021. The company had issued 5.29mn shares at a price of Rs.1101 raising Rs.~5.8bn in the IPO.

IPO Bankers ▪ ICICI Securities, IIFL Securities, Jefferies and Nomura

Corporate Bankers ▪ Standard Chartered Bank, ICICI Bank Limited

Auditors ▪ Statutory Auditors - Walker Chandiok & Co. LLP, Chartered Accountants

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Timeline and Revenue Split

Nazara Technologies since its inception has donned different hats to remain relevant in the gaming Kiddopia (gamified early learning), Nodwin Gaming and Sportskeeda are the key revenue contributors
industry in FY21

2021 2021 2020 2020 2019

Public Market Investment of Investment of Acquisition of 50.91% Acquisition of
IPO rising Rs.1bn by Rs.1.1bn by of the paid-up equity 100.00% of the paid-
Rs.~5.8bn Instant Growth Krafton, Inc. into share capital of up equity share
Ltd Nodwin Gaming Paperboat Apps capital of
CrimzonCode

2017 2018 2019 2019 2019 North America operations comprises of Kiddopia (gamified early learning) and Sportskeeda (Sports
Acquisition of Acquisition of Acquisition of Acquisition of 63.90% Acquisition of 62.53% website) (as of FY21)
54.99% the paid-up 52.38% the control in of the paid-up equity of the paid –up
equity share capital paid-up equity Halaplay share capital of equity share capital
of Nodwin Gaming share capital of Absolute Sports of Sports Unity
and launch of Next Wave
eSports

2015 2015 2015 2013 2011

Exclusive Mr. Manish Commenced the Commenced business Commenced
licensing Agarwal Freemium in Zambia, Uganda, operations in the
agreement for appointed as business in India Nigeria, Singapore, Middle East and an
Chota Bheem CEO Mauritius and Kenya office in Dubai
(Upto 2021)
Subscription revenues led by kiddopia and telco subscriptions is the key monetisation driver as of
1HFY21.

1999 2004 2007 2008 2009

Nazara founded Launched java Commenced Signed an exclusive Launched the
by Mr.Vikash games pay per work with Bharti wireless content subscription based
Mittersain & download with Airtel distribution ‘Games Club’ model
Mr. Nitish BPL and Hutch agreement with on Reliance
Mittersain Electronic Arts Asia Communications
Pacific

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Nazara Technologies has 9 direct subsidiaries, 9 step-down subsidiaries, 2 associate companies and 1 Joint Venture

NAZARA TECHNOLOGIES

Aug 2011 Mar 2013 May 2017 Dec 2017 Jan 2018 Sep 2019 Jan 2020 Feb 2020 Apr 2019 Apr 2019 May 2019
100% 100% 100% 52% 50% 74% 51% 100% 65% 26% 63%
Nazara Technologies Nazara Pte Limited Nazara Pro Gaming Nextwave Nodwin Gaming Pvt Absolute Sports Pvt Paperboat Apps Pvt Crimzoncode Halaplay Moong Labs Sports Unity Pvt Ltd
FZ LLC (Dubai) (Singapore) Pvt Ltd (India) Multimedia Pvt Ltd Ltd (India) Ltd (India) Ltd (India) Technologies Pvt Ltd Technologies Pvt Ltd Technologies Pvt Ltd (JV India)
(India) (India) (India) (Associate, India)
Providing Development and Development and Providing e-sports Sportskeeda website Developing gaming Designing computer,
subscription/ distribution of distribution of mobile Mobile game gaming consultancy - sports media, sports and e-learning Download of games Owning and Developing games software
download of games/ games, imagery, SMS games, internet based development, related to organizing consultancy, sports software applications and digital operating a ‘daily for major mobile development,
other similar contents and IVR on mobile games, and any other focused on gaming events, management, sports for the mobile advertising services fantasy sports’ platforms including development of
on mobile through phones. games through developing casual sponsorship and magazines, online domain. “KIDDOPIA” platform Halaplay iOS, Android and mobile applications
telecom consumers in telecom service and multi-player related consultancy and print news that enables sports Windows Phone. and other related
the Middle East providers games in the sports coverage enthusiasts to play activities – Qunami
genre cash based games

Mar 2013 Jul 2014 May 2017 Aug 2019 Jan 2020
100% 100% 26% 100% 100%
Nazara Technologies Nazara Bangladesh Mastermind Sports Nodwin Gaming Kiddopia USA Inc
(Mauritius) Limited (Bangladesh) Limited (Associate, International Limited (USA)
India) (Hong Kong)
Interactive wireless Acquiring, Organizing, managing, Distribution activities
games, wallpapers developing, Making games promoting, for software
and ringtones, on promoting and focused on live sponsoring and applications
mobile devices to maintaining all types sports marketing of all types
telecom operators of internet channels of games and gaming
across the globe portals and websites events

May 2013 May 2013 Oct 2013 Jun 2013

100% 100% 100% 100%
Nazara Zambia Ltd NZMobile Nigeria Ltd Nazara Uganda Ltd NZ Mobile Kenya Ltd NZ World Kenya
(Zambia) (Nigeria) (Uganda) (Kenya) Limited (Kenya)
Apr 2018
Mobile value-added Internet-based Providing internet, IT Supply of value-added 100% Business of gaming
services through content, media and services, establishing, phone services, and betting.
telecom consumer commerce, services, managing, internet, distribution
base in Zambia carrying on business as maintaining, selling and developing of
IT service providers or hiring telephone games, animation,
exchanges wallpaper, SMS

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Segmental Break-up

Skill-based, fantasy and trivia

SEGMENT Gamified Early Learning eSports Freemium Telco Subscription
real money gaming

FY21 Revenues (% Contribution) Rs.1758mn (~39%) Rs.1701mn(~37%) Rs.195mn (~4%) Rs.749mn (~17%) Rs.138mn (~3%)

FY21 EBITDA (margin %) Rs.125.7mn (~7%) Rs.304.8mn (~17.9%) Rs.41.3mn (~21.2%) Rs.137.3mn (~18.3%) Rs.-57.5mn (NA)

Nazara Technologies FZ, Nazara Halaplay Technologies, Sports Unity,

Subsidiary under which the Next Wave Multimedia,, Moong
Paperboat Apps Pvt Ltd Nodwin Gaming, Absolute Sports. Pte, Nazara Pro Gaming, CrimzonCode Technologies, Nzworld
operations are held Labs Technologies
Mastermind sports limited, Kenya

Nazara Technology Stake (%) in

~51% ~50.1%, ~74% ~52%, ~24% 100%, 100%, ~26% ~65%, ~63%, ~100%, 70%
the corresponding subsidiary

Halaplay, Qunami, Carrom Clash,

Mobile Applications/ World Cricket, WCC 2, WCC 3, Beach Games Hub, Games Club, Games
Kiddopia Nodwin Gaming, Sportskeeda Top Quiz, Mobilebaazi, WCC
Intellectual Properties (IPs) Cricket, Real Carrom, Epic Cricket Lounge
Rivals, Big Pesa
Immersive, self-directed learning #1 player in the fast-growing Casual to mid-core, free-to-play Bouquet of mobile games offered Strategic presence in real money
Description experience with content designed Indian eSports segment and sports simulation and children’s as value-added services to telco gaming and sports fantasy
and developed in-house leading sports news destination games subscribers gaming

eSports and sports fans, Sports Mass mobile internet users, First-
Target Demographics Children aged 2-6 years Players aged 15-35 years Youngsters, Sports Fans
spectators time mobile gamers

Media rights & Brand Sponsorships,

In-app purchases & Partnerships with telecom Platform fee collected from skill
Revenue Model Subscription based Ads through ad-networks and
Advertisements operators games played on the platform
programmatic-demand-channels

India, Middle East, Africa, APAC,

Geographical Split North America, India India, APAC, North America India, APAC India, Africa
Iran

Mr. Rajendran Poochi Ramasamy,

Mr. Anupam Dhanuka, Ms. Anshu Mr. Akshat Rathee, Mr.Porush
Management Ms. Jayashree Poochi Mr. Savio Saldanha NA
Dhanuka Jain
Ramaswamy
Dream 11, MPL, Qureka,
ABCmouse.com, EPIC, Adventure Gamerji, U Sports, Reliance Jio, Jetsynthesys, Moonfrog,
Competitors NA Loco,Brain Baazi, MyTeam 11,
Academy, PBS Kids games SoStronk, Gaming Monk, Games2Win
11wickets

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Financial snapshot
We have forecasted the revenues to increase at a ~34% CAGR Operating margins are estimated to expand by ~340bps over Gamified early learning and esports should together contribute
over the next 5 years the next 5 years led by operating leverage to more than 90% of the revenues in 5 years.
20.0
18.0 92.9% 88.5% 88.9% 90.2% 91.2% 91.6% 92.0% 2% 8%
79.5% 29%
16.0 73.9% 39% 44% 49%
14.0 53% 58% 62%
12.0 34%
10.0 20.0 28.3% 37%
37% 37%
8.0 36%
14.4 9.6% 10.0% 9.8% 10.5% 11.6% 12.7% 13.5% 34% 32%
6.0 0.0%
10.6
4.0 7.9
5.9 10.3%
2.0 1.7 1.7 4.5 3.3% 2.8% 3.6% 3.9% 4.3% 4.6% 4.9%
2.5 0.0% 2018 2019 2020 2021 2022e 2023e 2024e 2025e 2026e
0.0
2018 2019 2020 2021 2022e 2023e 2024e 2025e 2026e Telco Subs Freemium
2018 2019 2020 2021 2022e 2023e 2024e 2025e 2026e
eSports Real Money Gaming
Revenue (Rs.bn) Gross Margin (%) EBITDA Margin (%) PAT Margin (%) Gamified early learning
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

Nil additional CAPEX and improving margins should result in

Cash in hand should increase by ~50%... …led by a steady FCF generation over the next 5 years.
Return on Capital Invested surging in the next 5 years
120% 0.0 0.0
97% 0.9 600%
-1.0 -1.9 -0.1 0.8 516%
100% -2.1 -2.3 -2.3
-0.2 0.7 500%
-2.0 425%
80% -4.8 -5.2 -0.3 0.6
60% -3.0 -5.7 0.5 400%
-6.4 -0.4
60% -7.2 0.4
-4.0 -0.5 0.8
35% -0.5 0.7 300%
-0.6 0.3 0.6
40% -5.0
21% -0.6 -0.7 0.2 0.4
-0.6 0.3 200%
11% 12% 35% -6.0 0.1 0.0 0.1 0.2
20% 6% 6% -0.8
-1% 26% -0.7 0.0
18% -7.0 -0.8 -0.9 100%
0% -0.8 -0.8 -0.8 -0.1 22% -0.1 117% 103%
11% 9% 12% -0.9
2% 3% -8.0 -1.0 76% 91% 85% 82%
-2% -0.2 0%
2022e

2023e

2024e

2025e

2026e
2018

2019

2020

2021

-20%

2022e

2023e

2024e

2025e

2026e
2018

2019

2020

2021
2018 2019 2020 2021 2022e 2023e 2024e 2025e 2026e

RoCE RoIC Net Debt (Rs.bn) Net Debt/Equity FCF (Rs.bn) FCF/PAT
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 28
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Key Thesis

#1 Agile business Model - #6 Underlying growth drivers for

Probability of a non-linear growth esports are strong; Nazara has a
driver emerging is high definite competitive edge

#2 Experienced management, #7 Sportskeeda viewership on the

attractive holding structure and rise; monetisation to improve
lucid thought process over time

#3 Scalable business model with #8 Kiddopia to be the revenue and

enviable Intellectual Properties profitability growth engine over
(IPs) the medium term

#4 Attractive business economics #9 Nazara Technologies’

should lead to operating leverage ‘Freemium’ IPs are its moat,
and capital efficiency increase in In-app purchases to
drive growth

#10 Revenues from Real Money

#5 Unconventional prospects, gaming to be steady while telco
unconventional valuations subscription revenues should
decline

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#1 Agile business model - probability of a non-linear growth driver emerging is high

In terms of product mix, e-sports and gamified early learning that
The promoters of NAZARA have transformed the business to changing needs of the gaming industry; we believe were acquired in FY19 and FY20 respectively contribute to ~76% of
the acquisition spree is set to continue as the company keeps pace with changes in the gaming industry the consolidated revenues as of FY21
Cash
Date of Share Swap 2%
Subsidiary % holding Segment Consideration 2%
Acquisition (Rs.mn) 9% 8%
(Rs.mn) 29% 17% 39%
Nazara Technologies FZ LLC Aug-11 100% Telecom Subscription 1 0 Telecom
Subscription 14% 3%
34%
Nazara Pte Limited Mar-13 100% Telecom Subscription 0 0 based mobile 98% 89%
game publisher 8% 37%
Mastermind Sports Limited May-17 26% Telecom Subscription 26 0 57%
33% 4%
16%
Nazara Pro Gaming Pvt Ltd May-17 100% Telecom Subscription 0 0
FY17 FY18 FY19 FY20 FY21
Next Wave Multimedia Pvt Ltd Dec-17 52% Freemium games 300 228 “We have relied on
astute deployment of Telco Subscription Freemium eSports
this cash generated to
Nodwin Gaming Private Limited Jan-18 50% e-sports 355 414 Real Money Gaming Gamified Early Learning
fund our inorganic
Sports and virtual reality growth in the past, and Source: Company Filings, Spark Capital
Instasportz Consultancy Private Limited Jul-18 9% 10 0 all our acquisitions have
entertainment
historically been funded
Khichadi Technologies Private Limited Apr-19 17% Vernacular RMG Quiz 8 0 through internal Even in terms of geographic diversification, the latest acquisitions
accruals.” have changed the mix meaningfully with contribution from India and
Moong Labs Technologies Private Limited Apr-19 26% Freemium 10 0 Nazara IPO Prospectus North America increasing to ~81% as of 1HFY21

Halaplay Technologies Private Limited Apr-19 65% Fantasy Sports 318 0 6% 12%
26% 13%
13% 42%
Sports Unity Private Limited May-19 63% RMG Quiz 61 0
19% 8%
Mobile gaming 20% 7%
Absolute Sports Private Limited Sep-19 74% Sportskeeda website 95 343 13% 8%
holding company 3%
6%
Paperboat Apps Private Limited Jan-20 51% Gamified learning 400 435 35%
59%
49% 41%
Crimzoncode Technologies Private Limited Feb-20 100% RMG Quiz 17 13
19%
Publishme Jun-21 69.8% Freemium 200 0
FY18 FY19 FY20 FY21
Total 1,801 1,434
India Middle East Africa APAC North America

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#1 Agile business model - probability of a non-linear growth driver emerging is high

The balance sheet should remain asset light with accumulation of cash
…as we see the requirement of incremental capital in any of the existing businesses to be minimal...
over the next 5 years…

Rs.mn FY17 FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e
37% 35%
51% 49% 59% Op. Profit before Working Capital Changes 808 722 448 -33 527 384 492 680 972 1,391
63% 67% 70% 74%
83% Total Working Capital Changes -93 -520 -109 82 306 -36 -26 -37 -53 -76

Net Cash Generated from Operating Activities 568 32 192 -22 674 257 325 423 582 816

Net cash from Investing Activities -545 -183 -675 89 -2,675 178 194 214 238 268

FREE CASH FLOW 560 13 134 -91 654 247 313 410 568 800
FY17 FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e
Net cash used in financing activities 0 371 59 34 2,171 -6 -6 -6 -6 -6
Tangible Assets Intangible Assets
Goodwill on conolidation Non-Current Investments Net increase in cash and cash equivalents -46 237 -353 189 143 429 513 631 814 1,077
Net Current Assets without Cash Cash & Cash Equivalents
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

…leading to overall cash on books swelling up by Rs.2.8bn over …which along with a market capitalization of Rs.~50bn should Despite a lower stake, we believe the promoters would be open to
the nest 5 years… enable NAZARA look to further invest into the gaming ecosystem reducing their stake further if an opportunity arises
Incremental 60
Rs.3.4bn 50

40
8.2
7.2 30
6.4
5.7
4.8 5.2 20

10
2.1 2.3 2.3
1.9
0
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
Jun-21
May-21
May-21
May-21
May-21
May-21
May-21
May-21
Apr-21
Apr-21
Apr-21
Apr-21
Apr-21
Apr-21
Mar-21
FY17 FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e
Cash & Cash Equivalents (Rs.bn) Current Market Cap (Rs.bn)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#1 Agile business model - probability of a non-linear growth driver emerging is high

Plotting scenarios as per the cash and stake dilution probabilities, investing in NAZARA is all about the ‘unknowns’ that can emerge. We don’t see the promoters shying
away from reduction in their
Current holdings to fund the acquisitions.
Based on FY26 estimates Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
Estimates Historically though, the company has
Cash In Hand (FY21) 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 relied on internal accruals for
acquisition, we don’t rule out the
Probable Dilution (%) 0.0% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0% 22.5% 25.0% probability of NAZARA taking
Promoter Stake post dilution (%) 20.4% 20.4% 19.4% 18.9% 18.4% 17.9% 17.3% 16.8% 16.3% 15.8% 15.3% advantage of its current valuations
to fund further acquisitions.
Value of the dilution at CMP 0 2,360 3,540 4,720 5,900 7,080 8,260 9,440 10,620 11,800
Pay-out for the acquisition 4,784 7,144 8,324 9,504 10,684 11,864 13,044 14,224 15,404 16,584
Assuming the acquisition target to
have similar numbers as of NAZARA.
Based on FY26 numbers Assuming NAZARA acquiring only
55% of the company
Target EV/Sales 2 2 2 2 2 2 2 2 2 2
Target EV/EBITDA 14 14 14 14 14 14 14 14 14 14
At ~20% dilution, the overall Sales
Nazara Stake 55% 55% 55% 55% 55% 55% 55% 55% 55% 55%
and EBITDA should be higher by
~67% each while EPS could be as
Acquisition Financials higher than our current FY25
estimates by ~67%.
Sales 4,600 6,869 8,004 9,139 10,273 11,408 12,543 13,677 14,812 15,947
EBITDA 622 929 1,082 1,236 1,389 1,543 1,696 1,850 2,003 2,157
“We are also actively looking at
Margin (%) 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% freemium space again, because we
believe that the talent in India of the
in-development studios has
Incremental Addition to FY26 Sales 23% 34% 40% 46% 51% 57% 63% 69% 74% 80% significantly improved over the last
Incremental addition to FY26 EPS 3% 11% 15% 18% 22% 25% 28% 31% 34% 36% several years. And the ability for
Indian gaming companies to deliver
world-class gaming content for India
Valuations or the global markets has now
become a reality and you will see this
EV/Sales 2.0 1.7 1.5 1.5 1.4 1.3 1.3 1.3 1.2 1.2 1.1
as a very large opportunity coming up
EV/EBITDA 15.1 12.3 11.2 10.8 10.4 10.0 9.6 9.3 9.0 8.7 8.4 in the next few years. So we are going
P/E 47.4 45.9 42.6 41.3 40.0 38.9 37.9 37.0 36.2 35.4 34.7 to definitely double down in that
space as well.”
PEG 0.9 0.9 0.8 0.7 0.7 0.6 0.6 0.6 0.6 0.5 0.5
Mr. Nitish Mittersain, JMD, Nazara
Earnings CAGR 50% 51% 55% 57% 58% 60% 62% 63% 64% 66% 67% Technologies
Source: Company Filings, Spark Capital

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#2 Experienced management, attractive holding structure and lucid thought process

Nazara Technologies has been open to divesting/increasing
NAZARA has an attractive holding structure which in our opinion is a win-win for all the stakeholders stake as in per the needs of the business and the founder
promoters
Mr. Vikash Mittersain Mr. Nitish Mittersain Mr. Manish Agarwal Mr. Rakesh Shah Nazara Technologies Ownership (%)
(Chairman & MD) (Joint MD) (Group CEO) (Group CFO)
March-19 March-20 September-20 March-21 April-21

GAMIFIED EARLY ESPORTS – ESPORTS – NEXT WAVE

LEARNING NODWIN GAMING ABSOLUTE SPORTS TECHNOLOGIES
74%
~39% of REVENUE ~30% of REVENUE ~8% of REVENUE ~4% of REVENUE 65%
55% 55% 57% 50% 50% 55%
~21% of EBITDA ~22% of EBITDA ~28% of EBITDA ~7% of EBITDA 38%
~51% HOLDING ~50% HOLDING ~74% HOLDING ~52% HOLDING

Mr. Porush Jain Mr. Rajendran Poochi Nodwin Gaming Halaplay Technologies
Mr.Anupam Dhanuka Mr. Akshat Rathee
(Co-founder and CEO, (Co-founder & ED, (Founder and CEO, Ramasamy (Co-founder
Paperboat Apps) Nodwin Gaming) Absolute Sports) & CEO, Next Wave) “The infusion in Halaplay was to really kind of take a dominant
shareholding in Halaplay in line with the thought process that this is
Ms.Anshu Dhanuka Other Share Holders Other Share Holders Ms. Jayashree Poochi not an area where we would like to burn money, we will not like to
(Co-founder and CPO, Ramaswamy (Co-founder invest massive amount of money in brand building, consumer
Paperboat Apps) and COO, Next Wave) acquisition and the founders wanted to really look at a new kind of a
➢ Good Game ➢ Mr. Porush Jain segment and not really look at a wait and watch kind of a strategy, so
Investment Trust
➢ Absolute ESOP Other Share Holders we gave them exit and we invested into Halaplay and took the 75%
Other Share Holders ➢ Jetsynthesys Pvt majority which you see in a controlling stake changing.” Mr. Manish
Trust
Ltd Agarwal – Group CEO, Nazara Technologies
➢ Pratithi Investment ➢ Srinivas Rowjee ➢ PR Rajendran
➢ Anupam Dhanuka Cuddapah
Trust ➢ PR Jayashree
➢ Anshu Dhanuka
➢ Krafton Inc. ➢ Mr.Sankalp Sharma ➢ R Kalpana Funding the subsidiaries and Stake dilution
“On the fundraise, all our companies are really generating cash and at this
FRIENDS OF NAZARA juncture if you look at our largest business segment – paperboat apps, it
has a positive working capital and it is adding cash every month. So, for
Source: Company Filings, Spark Capital
them to really require funds or funding to grow, it will be a function of
“Krafton is the world's largest game publisher and a company investing into an eSports company is a very strong endorsement to -- and signalling to the rest of the M&A, which we can jointly plan, and we can fund and create structures
global publishers that this is a partner whom they can trust on high-quality experiences being created in offline and online. Second thing is, Krafton, with their PUBG that can help them. So, I do not see a dilution really happening until unless
relaunch, we hope that at a fair process, but with our quality we will be able to work very closely with them to build eSports as we were working pre-ban of PUBG we wish to, and we do not wish to do so right now. So, from that
with Tencent in India and build very strong IPs and community for Tencent earlier. So we have that community, we understand what kind of that community really perspective I do not see any kind of dilution being envisaged in
likes and we know the team also very well. So that is a second thing. Third thing is, this really gives us a strategic advantage to build IPs around the games of downstream and other subsidiaries. We have enough cash on our balance
Krafton, because you are not worried about balance of power between publisher and the eSports company because they are your strategic investor and hence with sheet to support their growth plans, which we understand could be value
them you can launch leagues, franchises, cups in India and other South Asia and other countries where they are interested and that is also a very, very strong IP accretive, EBITDA accretive and not just kind of burning cash.” Mr.Manish
building capability or strategic value, which gets created.” Mr. Manish Agarwal – Group CEO, Nazara Technologies Agarwal – Group CEO, Nazara Technologies

Page 33
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#2 Experienced management, attractive holding structure and lucid thought process

Experienced management with ~15+ years relevant experience aiding them to strike a fine balance between investing for growth and delivering EBITDA margins.
Name Designation Qualification Years with Nazara Years of relevant exp Previous Organisations
Mr.Nitish Mittersain Joint Managing Director B.Com 20+ years 20+ years NA
Mr. Manish Agarwal Group CEO B.Tech, PGDIM (IIM Ahmedabad) 6+ years 20+ years Reliance Games, UTV Software Communications Limited, Hindustan Unilever Limited
Mr. Rakesh Shah Group CFO B.Com, CA 10+ years 24+ years Yahoo India Private Limited, ANZ International, Electronic Data Systems
Ms. Anshu Dhanuka Cofounder & CPO, Paperboat Apps BA, MA (University of Nottingham) 1+ year 10+ years Walnut Labs Private Limited
Mr. Anupam Dhanuka Cofounder & CEO, Paperboat Apps BE, MS (Carnegie Mellon University) 1+ year 18+ years Walnut Labs Private Limited, Morgan Stanley
Mr. Porush Jain Founder & CEO, Absolute Sports B.Tech, MBA (Symbiosis) 1+ year 11+ years Infosys Technologies
Mr. Pratik Shah Additional Director, Halaplay Tech B.Tech 1+ year 11+ years Mastermind Sports Limited,Zootr Sports Private Limited, Pingaala Technologies LLP
Ms.Jayashree PR Cofounder & COO, Next Wave M.A (Arts) 4+ years 25+ years NA
Mr.Rajendran PR Cofounder & CEO, Next Wave NA 4+ years 25+ years NA
Mr. James Savio Saldanha CEO, Nazara FZ LLC B.Com 10+ years 16+ years Arvato Mobile Middle East FZ-LLC, Channel [V] and City 7 TV
Mr. Akshat Ratheee MD, Nodwin Gaming B.Com, MBA 2+ years 7+ years PGM Entertainment and Ernst & Young

NAZARA is one of the few profitable players in an industry dominated by We anticipate NAZARA margins to only slightly inch-up NAZARA has a clear policy of not getting into the negative territory of EBITDA
upfront loaded loses as we believe incremental margins will be reinfused margins…
for growth “Kiddopia, we believe that -- I mentioned before, we are not really looking at
Year of
Company name Revenue EBITDA Margin (%) 32%
financials 3,000 35% growing it at the cost of getting into negative EBITDA. We have done our
Moonfrog FY20 1367 504 37% 28% experiments of very high spends, very low spends, and we understand our sweet
2,500 30% spot of the marketing spends. And our view is that it has to be a balance between
Play games 24x7 FY20 14177 4641 33%
net new subscriber growth and the EBITDA margins. So we don't see it going into a
Junglee Games FY20 3347 885 26% 25%
2,000 negative territory at all.” Mr.Manish Agarwal – Group CEO, Nazara Technologies
Head Digital Works FY20 5998 1138 19% 20%
Delta Corp FY21 1834 211 11% 1,500 ..but will continue to invest behind growth, to remain competitive
12% 13% 14% 15%
Nazara Technologies FY21 4542 452 10% 10% 10% 11%
1,000 10%
My Team 11 Fantasy sports FY20 253 -48 -19% 10% “In terms of what is the growth and margins, our margins are purely dependent on
Sporta Tech Pvt Ltd FY19 7755 -1566 -20% how much of investment we want to do in new IPs and because our new IP gets
500 break even in three, four years and the second thing is how soon does the COVID
5%
BalleBaazi FY20 715 -180 -25%
really allow us to have more and more offline events because of venue cost, these
Moonshine Technology FY20 715 -180 -25% 0 -2% 0% two factors are an input to our margins, and at this juncture it will be difficult for
Tictok Skill Games FY20 267.2 -271 -101% us to give any idea about what kind of margins are we going to look at. If you look
-500 -5%
Gambit Sports FY20 49 -86 -175% at Nodwin business they delivered roughly around 11.5%, 12% margins last year
FY17

FY18

FY19

FY20

FY21

FY22e

FY23e

FY24e

FY25e

FY26e
Paytm FY20 170 -999 -586% versus 4%, 5% earlier year so that margin increase happened because of no new
IPs launched and no offline events and that really shot up their margin however
Ability Games FY20 26 -166 -651%
4%, 5%, 6% is the right way to look at that business.” Mr.Manish Agarwal – Group
Galactus Funware Tech FY20 182 -2976 -1637% EBITDA margin (%)
CEO, Nazara Technologies
Source: Company Filings, ROC filings, Spark Capital
Page 34
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#3 Scalable businesses with enviable Intellectual Properties (IPs)

The casual gaming segment is projected to The esports segment is projected to be the fastest Fantasy sports applications on the back of Cricket The US gamified learning market is anticipated to
increase at a ~30% CAGR over 5 years growing among the Indian gaming subsegments should witness increased traction zoon over the near term
Freemium (Rs.mn) esports (Rs.mn) Fantasy Sports/Real Money Games Gamified Early Learning (Rs.mn)
(Rs.mn)
51000 9,07,200
35000
103000

47%
30% 34% 32% CAGR
CAGR Market Market Market
Market CAGR CAGR
Share Share Share 2,88,000
Share 13,860 ~15.9% ~0.5% 26,000 ~0.6%
~1.4% 8,200

195 1,300 138 1,758

Nazara FY21 Market Size (CY20) Projected Size Nazara FY21 Market Size (CY20) Projected Size Nazara FY21 Market Size Projected Size Nazara FY21 Market Size Projected Size
revenues (CY25) revenues (CY25) revenues (CY20) (CY25) revenues (CY20) (CY23)

Market – Indian Casual Games, Market – Indian esports Market – Indian Fantasy Sports Market – US Gamified Learning

6,000 250
223
5,119 14,000
600 203 12,307
5,000
506 200 184 12,000
500 3,911 168
422 4,000 152 10,000
150 138 8,321
400 351 2,981
3,000 8,000
293
300 244 2,267 5,626
100 6,000
195 2,000 1,719
200 3,823
1,300 4,000
2,610
50 1,758
100 1,000
2,000

0 0 0 0
FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e

Nazara Freemium Revenues (Rs.mn) Nazara esports Revenues (Rs.mn) Nazara real money gaming Revenues (Rs.mn) Nazara Gamified Early Learning Revenues (Rs.mn)

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 35
 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#3 Scalable businesses with enviable Intellectual Properties (IPs)

Opportunity for geographical cross pollination galore We believe the biggest moat for Nazara Technologies are the Intellectual Properties (IPs) in its possession

eSports – Gamified Number of IPs in the esports segment

Telco Freemium - Freemium - esports - Real Money
Nodwin Early
Subscription Next Wave Publishme Sportskeeda Gaming
Gaming Learning Format IPs
4
2019-20
3

India 4
2018-19
3 esports IPs
1
2017-18
Middle 1
East Content IPs
0
2016-17
1

Africa 0 1 2 3 4 5

Joint / Owned IP Globally Licensed IP

APAC
Real Money
Games/Fantasy
Sports IPs
Iran
Freemium IPs
Gamified early
learning IP
North
America
“What do we see when we look at new markets, which is a function of different segments. For example, when we are
looking at going into new market in eSports, we look at what is the kind of games, what is the relationship which we
have, what's the size of that market and can this market eventually help us in building either large eyeballs or building
Europe a dominance, so that we can flanker it for anyone not emerging -- coming into our territory. For example, expansion
into Nepal -- sorry, an expansion into Sri Lanka, expansion into Bangladesh, in Middle East and then in – future in
Africa is from that perspective that these are the markets, which are going to be very big and we need to replicate our
playbook of India. For the Kiddopia expansion, it is all about the size of market and LTV CAC, and which is the same
Source: Company Filings, Spark Capital case for World Cricket Championship.” Mr.Manish Agarwal – Group CEO, Nazara Technologies
Already Opportunity Not
Present to enter Conducive Source: Company Filings, Spark Capital Page 36
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#4 Attractive business economics should lead to operating leverage and capital efficiency
We anticipate EBITDA margins to expand over the next 5 years A&P and Commission to increase led by higher sales from Higher A&P outlay behind esports and higher commission due
led by lower operating costs gamified early learning and esports to higher kidoppia revenues should limit margin expansion
5.6%
3,000 32% 35% FY21 - 26 CAGR
28% 48%
2,500 30%
43%
25% 3.6% 3.1% 4.4%
2,000 13.5% 34% 36%
20%
1,500 14% 10.0% 25%
12% 13% 15%
10% 10% 10% 11% 16%
1,000
10% 6.9% 10%
500 5%

A&P

FY26E EBITDA
Other Expenses
Content Cost

Comission
FY21 EBITDA Margin

Employee Cost
0 -2%
0%

Margin

A&P
Content Cost

Other Expenses

EBITDA
Revenue

Comission
Employee Cost
-500 -5%
FY17

FY18

FY19

FY20

FY21

FY22e

FY23e

FY24e

FY25e

FY26e
EBITDA (Rs.mn) margin (%)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

Gamified early learning and esports should contribute to more Invested capital to decline due to amortization of goodwill and Return On Equity (RoE) seems optically inferior due to the high
120% than ~90% of the overall EBITDA limited CAPEX requirement. cash balance on books.
2,000 120%
100% 1,800 97% 35%
21% 100%
28% 1,600
80% 38% 48% 53% 58% 1,400 80% 26%
60% 1,200
51% 60%
40% 46% 1,000 60%
41% 18%
36% 34% 800 35%
20% 31% 40%
600 12% 11%
21% 9%
0% 400 12% 8%
6% 20% 6%
200 4% 4%
-20% 2% 3%
FY21 FY22e FY23e FY24e FY25e FY26e 0 0%
FY21 FY22e FY23e FY24e FY25e FY26e
Telco Subscription Freemium FY21 FY22e FY23e FY24e FY25e FY26e
eSports Real Money Gaming
Gamified Early Learning Unallocated Invested Capital (Rs.mn) RoIC RoCE (%) RoE (%)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 37
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#4 Attractive business economics should lead to operating leverage and capital efficiency
Gamified e-learning segment margins should expand led by lower Selling and distribution expenses refer to the fixed commission to platform Bulk of spending is on advertisements, which often leads to
cost of customer acquisition over the medium-term operators. Business promotion is Customer Acquisition cost. revenue attribution over time
“If you see advertising today is 55% broadly of our revenues.
2,000 14.0% 16.0% Rs.mn % of sales
13.3% Expense And the bulk -- the largest component of advertising comes
12.5% 14.0% Nature from the Kiddopia and ad spends, it's a very linear equation
Rs.mn FY19 FY20 FY21E FY19 FY20 FY21E between how much of marketing spend you're doing and
1,500 10.2% 12.0%
how much is your net new subscriber growth is happening
10.0% Revenues 183 580 1758 because there our churn is constant and the number of new
8.1%
7.1% users, which you add over to the system will directly be
1,000 8.0% Semi
1,725 Employee Expenses 18 35 69 10% 6% 4% proportional to net new subscribers. And that again is
Variable
6.0% directly proportional to your revenues. However, you
500 1,103 4.0% Selling & Distribution 53 162 492 29% 28% 28% Variable account for that marketing spend in the same month, while
703 revenues get deferred, because your annual revenues is 30%
126 391 2.0% Business Promotion 122 403 1014 67% 69% 58% Variable and they get accounted in accounts for over 12 months
212
0 0.0% rather than the same month. So short is good. So given that
Others 10 14 57 5% 2% 3% Fixed unit economics is something which we are very strong
FY21 FY22e FY23e FY24e FY25e FY26e
hawkeye-focused, marketing is a linear attribution to what
Gamified Early Learning EBITDA EBITDA margin (%) EBITDA -20 -33 126 -11% -6% 7% could be on net new subscribers rather than having a
linkage to our revenue in that same month.” Mr.Manish
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Agarwal – Group CEO, Nazara Technologies

LTV/CAC is attractive for gamified early learning, which should lead On a per subscriber basis, we anticipate the cost of subscription to slightly decline Apple Privacy Issue, I think that's a -- fundamentally the
to operating leverage over time. as ‘word of mouth’ promotions take over. question there is, how do you attribute a new user, and it's
Particulars in USD the attribution problem statement which there are very,
Per Subscriber basis (USD) FY20 FY21 FY22e FY23e FY24e FY25e FY26e very large companies like AppsFlyer, very large ad networks
Lifetime Value (LTV) (24 months) 61 like IronSource, Unity, Facebook, Google, they are all
working on it, and our view is that it is a level playing field
(less) App Store Commissions 28% for all game publishers, not just us. And hence, whatever
Gross Revenue 41 72 72 73 74 76 77
opportunities will emerge, it will emerge for everyone. It's
Net LTV (24 months) 44
not a localized problem statement. It's an industry problem
Commission 11 16 16 16 17 17 17
(less) Cost of Subscription 30 statement, and given that copious amount of tech brains are
working hard to really create new attribution, and Apple
Net Revenue 29 56 56 57 58 59 60 also coming out with its own solutions, I think it’s a few
Gross Profit 14
weeks, few months time period when the new attribution
Gross Margin 32% Cost of subscription 28 32 32 30 29 29 29 base will emerge and how to do that respecting the privacy
of the users. Secondly, this also gives us an opportunity to
Content Cost 8-10% Content Cost 4 4 4 4 4 4 4 broad base our marketing spends beyond Apple, Google and
Facebook platforms into other platforms and which is where
EBITDA Margin 22-24% EBITDA -2 19 20 22 24 25 26 we are really tapping and experimenting as we speak”
Mr.Manish Agarwal – Group CEO, Nazara Technologies
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Source: Company Filings, Spark Capital
Page 38
 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#4 Attractive business economics should lead to operating leverage and capital efficiency
Absolute Sports (Sportskeeda) contributed ~48% of the cost base of Absolute Sports (Sportskeeda) is fixed in our assessment, which should lead to operating leverage over the medium-term
to ~24% revenues and ~55% EBITDA of
% of revenue Nature of the
NAZARA’s esports business in FY21 FY21-26 CAGR
FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e expense
Revenue 25%
Information Technology 3.9% 5.3% 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 25% Variable
Advertising & Promotion 0.3% 0.8% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 25% Variable
Revenue Miscellaneous 34.9% 37.3% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25% Variable
, 24% Employee Expenses 44.1% 40.5% 19.7% 19.7% 19.7% 19.7% 19.7% 19.7% 25% Semi Variable
EBITDA, Rent & Repairs 2.7% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 15% Fixed
45% Power & Fuel 1.0% 1.1% 1.1% 1.0% 0.9% 0.8% 0.8% 0.7% 15% Fixed
EBITDA,
55% Rates 0.3% 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.4% 15% Fixed
Revenue Telephone 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 15% Fixed
, 76% Travelling Conveyance 1.8% 1.2% 1.2% 1.1% 1.0% 0.9% 0.8% 0.8% 15% Fixed
Legal and Professional 4.1% 2.0% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 15% Fixed
Cost Repairs 1.4% 1.3% 1.3% 1.2% 1.1% 1.0% 1.0% 0.9% 15% Fixed
Auditor Remuneration 0.0% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.2% 15% Fixed
Nodwin gaming Absolute Sports EBITDA 5.3% 8.8% 41.8% 42.3% 42.7% 43.1% 43.5% 43.9% 26%

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

“In terms of what is the growth in margins, our Less than 5% of Nodwin Gaming costs are fixed. Higher cost outlay to develop premium ‘Intellectual Properties (IPs) to keep margins subdued in the near term.
margins are purely dependent on how much of % of revenue Nature of the
FY21-26 CAGR
investment we want to do in new IPs, and because FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e expense
a new IP gets broke even in three, four years. And Revenue 32%
the second thing is how soon does the COVID Advertising 1.5% 34.7% 36.0% 36.0% 38.0% 39.0% 39.0% 39.0% 34% Variable
really allow us to have more and more offline Event 48.1% 23.1% 24.0% 27.5% 28.0% 29.0% 29.0% 29.0% 37% Variable
events, because a venue cost. These two factors Communication 11.6% 10.2% 11.0% 11.0% 10.8% 10.8% 10.8% 10.8% 31% Variable
are an input to our margins and at this juncture it Travelling Conveyance 10.4% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 32% Variable
will be difficult for us to give any idea about what Employee Expenses 6.6% 6.6% 4.9% 4.5% 4.1% 3.7% 3.4% 3.1% 20% Semi Variable
kind of margins are we going to look at. If you look Tools and Equipment 0.5% 1.7% 1.2% 1.0% 0.9% 0.8% 0.7% 0.7% 18% Semi Variable
at Nodwin business, they delivered roughly around Equipment Rental 0.7% 1.5% 1.0% 0.9% 0.8% 0.7% 0.7% 0.6% 18% Semi Variable
11.5%, 12% margins last year versus 4%, 5% earlier Miscellaneous 3.7% 1.6% 2.8% 2.5% 2.3% 2.0% 1.8% 1.7% 18% Semi Variable
year. So that margin increase happened because Legal and Professional 0.2% 0.7% 0.5% 0.4% 0.3% 0.3% 0.2% 0.2% 10% Fixed
of no new IPs launched and offline events and that Content 0.9% 0.7% 0.4% 0.4% 0.3% 0.2% 0.2% 0.2% 10% Fixed
really shot up their margin. However, 4%, 5%, 6% Rent 8.6% 0.7% 0.4% 0.3% 0.3% 0.2% 0.2% 0.2% 10% Fixed
is the right way to look at that business” Bad Debts 0.0% 0.7% 0.4% 0.3% 0.3% 0.2% 0.2% 0.2% 10% Fixed
Mr.Manish Agarwal – Group CEO, Nazara Auditor Remuneration 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 10% Fixed
Technologies Allowance 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 10% Fixed
EBITDA 7.2% 11.3% 10.6% 8.4% 7.0% 6.2% 7.1% 7.8% 24%
Source: Company Filings, Spark Capital
Page 39
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Unconventional prospects; unconventional valuations

The valuations of the gaming sector have been from a long-term perspective; myopic valuations might lead to the stock being perennially costly.

EV/EBITDA EV/Sales 362.7 P/E FCF Yield (%)

91.1 9.1 1.7%
69.8 218.0 1.4%
6.9 1.2%
48.6 5.1 150.6 0.9%
32.2 3.7 101.6 0.7%
2.7 0.5%
21.1 1.9 68.8
14.0 47.4

FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e

Except for the Real Money Gaming companies, the Indian gaming peers of Nazara Technologies are valued at a premium

~ Users Founded Year of Revenue EBITDA Investment Valuation

Publisher Application Location Date EV/Sales EV/Users Key Investors
(Millions) Year financials (Rs.mn) (Rs.mn) Stage (USD mn)
Tencent, Steadview, Tiger Global, ChrysCap, TCV, D1 Cap,
Sporta Tech Dream 11 100 Mumbai 2008 FY19 7755 -1566 Series F ~5000 Mar-21 46.4 50.0
Falcon Edge, Multiples, Kalaari Capital, TPG Growth.
Base Partners, RTP Global, SIG, Go-Ventures, Telstra
Galactus
MPL 60 Bangalore 2018 FY20 182 -2976 Series D ~945 Feb-21 374.3 15.8 Ventures, Founders Circle, Sequoia Capital, Composite
Funware Tech
Capital, Moore Strategic Ventures and Play Ventures
Paytm Paytm First games 45 Noida 2018 FY20 170 -999 Series C ~162 Apr-20 68.5 3.6 PayTM, AGTech Holdings
Tictok Skill Kalaari Capital Partners, Courtside VC, FinAdvantage, Makers
Winzo Games 110 Delhi 2016 FY20 267.2 -271 Series B ~61 Dec-20 16.5 0.6
Games Fund II Company Ltd, AngelList, Velo Partners and others
Halaplay, Kiddopia,
Nazara Tech 110 Mumbai 1999 FY20 4542 452 Listed ~572 Jun-21 9.1 5.2 NA
Nextwave Multimedia
Play Games 24 Rummy Circle, Ultimate
17 Mumbai 2006 FY20 14177 4641 Series A ~509 Nov-19 2.6 29.9 The Raine Group, Tiger Global
X7 Teen Patti, My 11 Circle
Junglee Rummy, Junglee
Junglee Games 7 Delhi 2010 FY20 3347 885 Acquired ~132 Mar-21 2.8 18.9 Flutter.com, 500 Startups, Bay Partners
Teenpatti,Howzat
Head Digital Ace2three, Rummy Buramn Family Holdings, Clairvest, Khattar Group of
6 Delhi 2006 FY20 5998 1138 Series B ~90 Aug-18 1.1 15.0
works King,FanFight companies, Midland States Bank
Rummy Gold, Ludo Club,
Moonfrog 50 Bangalore 2013 FY20 1367 504 Acquired ~99 Feb-21 5.2 2.0 Stillfront Group
Teen patti Gold
Source: Company Filings, RoC filings, Spark Capital

Page 40
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Unconventional prospects; unconventional valuations

Given the holding structure of Nazara Technologies, EV/Sales and EV/EBITDA might not be the right metric to value the company

EV/Sales EV/EBITDA P/E

35
140
120

30
120
100

25
100

80

20 80

EV/EBITDA
EV/SALES

Price/EPS
60
15 60

40
10 40

20
5 20

0 0 0
0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 0% 50% 100% 150% 200% 250%
FY20-24 SALES CAGR FY20-24 EBITDA CAGR FY20-24 EPS CAGR (%)
Source: Company Filings, Bloomberg and Spark Capital
Page 41
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Unconventional prospects; unconventional valuations

20-23 20-23 20-23

Company (USD mn) FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23
CAGR CAGR CAGR
Tencent Holdings Ltd 54,627 69,938 91,300 1,10,007 1,29,565 23% 16,125 25,464 26,300 31,183 38,001 14% 13,661 17,808 22,372 27,848 33,747 24%
Netease Inc 8,577 10,688 13,963 16,475 18,685 20% 1,997 2,109 2,808 3,543 4,340 27% 1,922 1,730 2,680 3,235 3,928 31%
Activision Blizzard Inc 6,489 8,086 8,707 9,756 10,146 8% 1,607 2,734 3,717 4,260 5,288 25% 1,450 2,296 2,976 3,488 3,711 17%
Roblox Corp -Class A 508 924 2,480 3,010 3,580 57% -76 -266 -254 -353 -440 NA NA NA 521 555 746 NA
Electronic Arts Inc 4,950 5,537 6,086 7,383 7,835 12% 996 1,445 2,010 2,256 2,468 20% 1,053 3,071 1,638 1,853 2,046 -13%
Take-Two Interactive Softwre 2,668 3,089 3,412 3,456 4,151 10% 207 425 789 540 911 29% 506 418 721 540 831 26%
Zynga Inc 1,322 1,975 2,914 3,186 3,365 19% -272 -370 634 756 760 -227% -50 -136 454 534 615 -266%
Ubisoft Entertainment 2,137 1,772 2,773 2,836 3,158 21% 184 -66 579 452 602 -309% 386 -11 386 332 384 -424%
Square Enix Holdings Co Ltd 2,402 2,440 3,000 3,050 3,173 9% 222 301 438 491 546 22% 167 196 234 307 340 20%
CD Projekt Sa 136 550 321 333 336 -15% 47 297 193 166 181 -15% 46 297 151 164 162 -18%
Gungho Online Entertainment 930 926 911 894 910 -1% 260 283 238 202 178 -14% 166 153 167 159 157 1%
Hangzhou Electronic Soul N-A 101 149 222 258 299 26% 32 59 77 98 116 25% 33 57 86 103 123 29%
Price/Earnings EV/Sales EV/EBITDA

Company (USD mn) Market Cap EV FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23

Tencent Holdings Ltd 7,39,919 7,58,922 54.2 41.6 33.1 26.6 21.9 13.9 10.9 8.3 6.9 5.9 47.1 29.8 28.9 24.3 20.0
Netease Inc 72,836 71,313 37.9 42.1 27.2 22.5 18.5 8.3 6.7 5.1 4.3 3.8 35.7 33.8 25.4 20.1 16.4
Activision Blizzard Inc 71,688 66,013 49.4 31.2 24.1 20.6 19.3 10.2 8.2 7.6 6.8 6.5 41.1 24.1 17.8 15.5 12.5
Roblox Corp -Class A 49,575 48,178 NA NA 95.1 89.3 66.4 94.8 52.1 19.4 16.0 13.5 -630.3 -181.0 -189.7 -136.5 -109.5
Electronic Arts Inc 39,600 35,388 37.6 12.9 24.2 21.4 19.4 7.1 6.4 5.8 4.8 4.5 35.5 24.5 17.6 15.7 14.3
Take-Two Interactive Softwre 20,193 17,653 39.9 48.3 28.0 37.4 24.3 6.6 5.7 5.2 5.1 4.3 85.4 41.5 22.4 32.7 19.4
Zynga Inc 11,595 11,673 -234.1 -85.4 25.5 21.7 18.8 8.8 5.9 4.0 3.7 3.5 -42.9 -31.5 18.4 15.4 15.4
Ubisoft Entertainment 8,535 8,818 22.1 -753.0 22.1 25.7 22.2 4.1 5.0 3.2 3.1 2.8 47.9 -133.4 15.2 19.5 14.7
Square Enix Holdings Co Ltd 6,003 6,600 36.0 30.6 25.7 19.5 17.7 2.7 2.7 2.2 2.2 2.1 29.7 21.9 15.1 13.4 12.1
CD Projekt Sa 4,789 4,327 104.8 16.1 31.8 29.2 29.5 31.9 7.9 13.5 13.0 12.9 92.1 14.5 22.4 26.1 23.9
Gungho Online Entertainment 1,864 1,012 11.2 12.2 11.2 11.7 11.8 1.1 1.1 1.1 1.1 1.1 3.9 3.6 4.3 5.0 5.7
Hangzhou Electronic Soul N-A 1,002 700 30.3 17.5 11.6 9.7 8.2 6.9 4.7 3.2 2.7 2.3 21.7 11.9 9.1 7.1 6.0
PEG: (Price/Earnings)/(EPS growth)
Source: Company Filings, Bloomberg, Spark Capital Page 42
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Unconventional prospects; unconventional valuations

Nazara Technologies on a PEG basis seems
costlier than a few of its international peers… ...however plotting the ‘option value’ that can emerge through dilution, the PEG ratio would see in line with most international peers

Current
Based on FY24 Estimates Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
Company Name PEG (x)* Estimates
Cash In Hand (FY21) 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784 4,784
Gungho Online
13.5
Entertainment Probable Dilution (%) 0.0% 5.0% 7.5% 10.0% 12.5% 15.0% 17.5% 20.0% 22.5% 25.0%
Promoter Stake post dilution (%) 20.4% 20.4% 19.4% 18.9% 18.4% 17.9% 17.3% 16.8% 16.3% 15.8% 15.3%
Roblox Corp -Class A 4.5
Value of the dilution at CMP 0 2,360 3,540 4,720 5,900 7,080 8,260 9,440 10,620 11,800
Pay-out for the acquisition 4,784 7,144 8,324 9,504 10,684 11,864 13,044 14,224 15,404 16,584
Nazara Technologies 1.9

Take-Two Interactive Based on FY26 numbers

1.5
Software
Target EV/Sales 2 2 2 2 2 2 2 2 2 2
Activision Blizzard Inc 1.2 Target EV/EBITDA 20 20 20 20 20 20 20 20 20 20
Nazara Stake 55% 55% 55% 55% 55% 55% 55% 55% 55% 55%
Tencent Holdings Ltd 1.1
Acquisition Financials
Square Enix Holdings Co
1.0
Ltd Sales 4,349 6,495 7,567 8,640 9,713 10,786 11,858 12,931 14,004 15,077
EBITDA 435 649 757 864 971 1,079 1,186 1,293 1,400 1,508
Netease Inc 0.7
Margin (%) 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Hangzhou Electronic Soul
0.3
N-A
Incremental Addition to FY26 Sales 41% 61% 72% 82% 92% 102% 112% 122% 133% 143%
Ubisoft Entertainment -0.1 Incremental addition to FY26 EPS -3% 10% 17% 23% 28% 34% 39% 44% 49% 53%

Zynga Inc - Cl A -0.1 Valuations

EV/Sales 3.7 2.7 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 1.5
Cd Projekt Sa -1.6 EV/EBITDA 32.2 23.8 21.1 19.9 18.9 18.0 17.2 16.4 15.7 15.1 14.5
PE 101.6 104.6 87.6 81.0 75.3 70.4 66.1 62.3 58.9 55.8 53.1
Electronic Arts Inc -1.7
PEG 1.9 2.0 1.4 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.6
Growth 53% 51% 61% 65% 69% 73% 76% 80% 83% 87% 90%
*2 year forward PE/2 year earnings CAGR
PEG: (Price/Earnings)/(EPS growth) Source: Company Filings, Bloomberg, Spark Capital Page 43
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Unconventional prospects; unconventional valuations

Discounted Cash Flow Valuations
FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E FY30E FY31E FY32E FY33E FY34E FY35E FY36E FY37E FY38E FY39E FY40E
Total revenue 1,902 1,720 1,697 2,475 4,542 5,939 7,852 10,568 14,444 19,957 24,946 31,182 38,978 48,723 60,903 73,084 84,046 96,653 1,11,151 1,27,824 1,46,998 1,69,047 1,94,405 2,23,565
growth (%) -10% -1% 46% 84% 31% 32% 35% 37% 38% 25% 25% 25% 25% 25% 20% 15% 15% 15% 15% 15% 15% 15% 15%
EBITDA 732 586 327 98 596 772 1,033 1,456 2,089 2,982 3,742 4,740 6,003 7,601 9,623 11,693 13,616 15,851 18,451 21,474 24,990 29,076 33,826 39,347
EBITDA margin % 38.5% 34.1% 19.3% 4.0% 13.1% 13.0% 13.2% 13.8% 14.5% 14.9% 15.0% 15.2% 15.4% 15.6% 15.8% 16.0% 16.2% 16.4% 16.6% 16.8% 17.0% 17.2% 17.4% 17.6%
Depreciation & Amort 12 82 195 263 355 264 245 228 212 198 225 200 200 200 200 200 200 200 200 200 201 202 203 203
EBIT 721 504 132 -165 241 508 788 1,228 1,877 2,784 3,517 4,540 5,803 7,401 9,423 11,493 13,416 15,651 18,251 21,274 24,789 28,874 33,623 39,144
Tax 108 118 42 72 31 90 141 220 337 500 703 908 1,161 1,480 1,885 2,299 2,683 3,130 3,650 4,255 4,958 5,775 6,725 7,829
Effective Tax rate (%) 15% 23% 31% -44% 13% 18% 18% 18% 18% 18% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
Minority Interest 0 -16 -108 -246 44 201 336 550 865 1,308 1,996 2,495 3,118 3,898 4,872 5,847 6,724 7,732 8,892 10,226 11,760 13,524 15,552 17,885
as a % of sales 0% -1% -6% -10% 1% 3% 4% 5% 6% 7% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
EBI 613 403 198 9 166 217 311 459 675 977 818 1,137 1,524 2,023 2,666 3,348 4,009 4,789 5,709 6,794 8,071 9,576 11,346 13,430
Depreciation & Amort 12 82 195 263 355 264 245 228 212 198 225 200 200 200 200 200 200 200 200 200 201 202 203 203
WC Changes -520 -109 82 -174 306 -36 -26 -37 -53 -76 -125 -156 -195 -244 -305 -365 -420 -483 -556 -639 -735 -845 -972 -1,118
as a % of sales -27% -6% 5% -7% 7% -1% 0% 0% 0% 0% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5%
Capex 0 0 1 1 -32 -10 -11 -13 -14 -16 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20
FCFF 105 377 478 99 796 435 519 637 820 1,083 898 1,161 1,509 1,959 2,541 3,163 3,768 4,485 5,333 6,335 7,517 8,912 10,557 12,496
FCFF/EBITDA 0.14 0.64 1.46 1.01 1.34 0.56 0.50 0.44 0.39 0.36 0.24 0.25 0.25 0.26 0.26 0.27 0.28 0.28 0.29 0.29 0.30 0.31 0.31 0.32

FY22 FY26
Discounted FCFF 13879 30600
PV of Terminal Value 48810 53203
EV 62689 83803
Less: Net Debt -5213 -8247
Implied Market Cap 67902 92050
Outstanding Shares 30 30
Target Price 2230 3023
CMP 1510 1510
Upside 48% 100%
Terminal Growth 5%
WACC 9%
Terminal Value 1,77,789

Source: Company Filings, Spark Capital Page 44

NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Underlying growth drivers for esports are strong; Nazara has a definite competitive edge
Nazara Technologies owns ~50.1% of Nodwin Gaming; Krafton Inc As per the payout done during the initial acquisition, Nazara had
• Nodwin Gaming, in partnership with game publishers and brands, is owns ~15%. acquired Nodwin Gaming at 1.1x one year forward EV/Sales
engaged in providing e-sports gaming consultancy related to organizing
gaming events, sponsorships and related consultancy services Krafton 753487 shares of
Rs.mn
• Nodwin Gaming offers premium eSports content (live and on demand) 15% Nazara Technologies
to TV broadcasters and OTT platforms. were offered at Rs.547
Cash Consideration 357
• Only company in India to have rights over professional eSports Pratithi per share
tournament IP’s & content IP’s and assets across grassroot, regional, Invstmt Trust Narara Issue of Equity 412
national and international eSports 6% Technologies Nazara Technologies
50% Total Consideration 770 currently holds 8207 which
Jetsynthesys post dilution is ~50.1% of
Net cash acquired with the
Monetization: Pvt Ltd 362 Nodwin gaming
subsidiary
Media rights, 11%
sponsorships, Acquisition EV 407 FY20 FY21
white label, data Good Game
services & ad
Stake Acquired 55.0% EV/Sales (x) 1.1 0.6
Invstmt Trust
networks 18% EV/EBITDA
Value of the Acquisition 741 8.5 5.4
(x)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

The growth has been significant post Nazara acquisition, margins to The EBITDA contribution for this segment should decline over the “Our kind of belief and conviction around eSports continues to be very strong
decline over the near term. next two years as events and advertisement related expenses rise and we believe that this is a segment, as the underlying market grows, this
6.0 14% segment will continue to grow and engage with the young millennials, and Gen
Nazara 12% 89% Zs in years to come. We have also expanded into South Asia in FY '21 with our
5.0 partnership with Tencent, and we continue to be a dominant player in eSports in
12% Investment
12% 10% India through our IPs, like India Premiership, Dew Arena et cetera.
4.0 11%
10% 8% In terms of what is the growth in margins, our margins are purely dependent on
3.0 8% how much of investment we want to do in new IPs, and because a new IP gets
7% 8% 6%
7% 7% broke even in three, four years. And the second thing is how soon does the
2.0 6% COVID really allow us to have more and more offline events, because of the
4% 28% 29% 29% 29% 28% 27%
23% 26% venue cost . These two factors are an input to our margins and at this juncture it
1.0 2% 19% 15% will be difficult for us to give any idea about what kind of margins are we going
13% 13% 13%
0.1 0.2 0.5 0.7 1.3 1.7 2.3 3.0 3.9 5.1 to look at. If you look at Nodwin business, they delivered roughly around 11.5%,
0.0 0% 12% margins last year versus 4%, 5% earlier year. So that margin increase
FY17

FY18

FY19

FY20

FY21

FY22e

FY23e

FY24e

FY25e

FY26e

happened because of no new IPs launched and offline events and that really
FY20 FY21 FY22e FY23e FY24e FY25e FY26e shot up their margin. However, 4%, 5%, 6% is the right way to look at that
business.
Revenue (Rs.bn) EBITDA margin (%) Revenue EBITDA
Mr.Manish Agarwal, Group CEO, Nazara Technologies
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Underlying growth drivers for esports are strong; Nazara has a definite competitive edge
The Key Performance Indicators of Nodwin Gaming has been on the rise over the past few years, we believe the increasing number of Intellectual Properties is the key competitive edge for Nodwin Gaming

229 ➢ Will be key for revenue monetisation from Media Rights

(~55% of revenues)
Hours of Content 119
95
Number of event Days ➢ More content can enable to pitch in for more
Produced/ (Online+ offline)
50 publishers.
Broadcasted
➢ More number of event days can lead to more
advertisements and brand sponsorships.
2016-17 2017-18 2018-19 2019-20

15 ➢ Number of IPs would determine the pull demand for

13
Number of the organiser from broadcasters.
Intellectual 6 7 Number of IPs and White ➢ Established IPs can be a definite moat as they can lead
Properties (IPs) Label works to attracting top talents.
being launched ➢ IPs right from grassroot level enables NAZARA to groom
gamers and create a pipeline for bigger tournaments.
2016-17 2017-18 2018-19 2019-20

36
Key Performance ➢ Rising number of broadcast partners indicate the quality
27 of the content.
Indicators (KPIs)
18 ➢ Increasing number of publishers augments the
Number of
Partners 8 Clients / Partners capabilities that NAZARA brings in as an organiser. .
3
➢ Increasing number of brand/ advertisement sponsors
for events underscores the marquee IPs of Nazara.
2016-17 2017-18 2018-19 2019-20 2020-21

138
➢ Advertising, event and communication expenses were
87 ~68% of the income in FY20.
Cost of Content ➢ Lower number of offline event days in FY21 led to higher
per hour 36 EBITDA (Rs.mn) EBITDA.
11 16
➢ EBITDA should increase to high single digit in the medium
term despite leverage due to rise in event led expenses.
2016-17 2017-18 2018-19 2019-20 2020-21

Source: Company Filings, Spark Capital

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Underlying growth drivers for esports are strong; Nazara has a definite competitive edge
Nodwin Gaming derives ~55% of its revenues from media rights, we expect this % contribution to sustain over the medium term.

MEDIA RIGHTS (~55% of revenues) WHITE LABEL IPs (~30% of revenues) BRANDS & ADVERTISERS (~15% of revenues)

The revenue generated from broadcasters for the The revenues paid by the publishers to the organisers The revenue paid by brands who associate themselves
What is this? broadcasting rights of the live esports tournaments or for hosting and conducting tournaments on their with the event organiser. The tournaments are often
to host the event videos on their platforms. specific games. co-branded with the sponsor name.

Who provides (partner)

Broadcasting companies Game Publishers Brands and Advertisers
this revenue?

The broadcaster targets the Gen Z and Millennial The game publisher in order to popularise the game to The brands reach the elusive millennial and the Gen Z
What is in it for the
population viewership and monetise through drive in-app purchases hosts tournaments to develop population who are the key audience for the esports
partner?
advertisements. mid and hard core gamers. events and games.

The partner looks for an established esports organiser The partner looks for organisers who can host
What does the partner High quality content that is competitive and hosts the
who can create marketing campaigns and create an tournaments across their key markets and popularise
look for? best of the players in grand sporting venues or arenas.
aura around the game and the event their brands along with the event.

Nodwin Gaming has been in the esports business for Nodwin Gaming has successfully co-branded several
Premium quality IPs that are well established among
NAZARA’s Right to Win ~10 years and has a strong knowhow and well tournaments for brands such as Mountain Dew fuelling
publishers and gamers.
established Ips that game publishers can leverage. the brand mileage.

Current Partners

KEY MOAT NAZARA’S ABILITY TO CONSTANTLY PRODUCE PREMIUM INTELLECTUAL PROPERITES (IPs) BY ATTRACTING AND RETAINING GOOD/MARQUEE PLAYERS
Source: Company Filings, Spark Capital

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 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Underlying growth drivers for esports are strong; Nazara has a definite competitive edge
The popularity of the title is the key for the players to determine their participation in the tournament. The participants also want to take part in internationally-recognised tournaments that enable them to
Battlegrounds Mobile India could be a key esports game in the near future qualify for international tournaments and attract investments into their teams

Number of White Label works Nodwin Gaming

done by Nodwin Gaming Shareholdings (%) Popular Multi Player Fighting
2019-20 3 4
games of Krafton 22% 18%
Krafton,
15.00%
2019-20 8 2018-19 3 4

2018-19 6 2017-18 1 1 78% 82%

2017-18 5 2016-17 1

0 2 4 6 8 Unique IPs Unique Events

2016-17 5
Globally Licensed IP Joint / Owned IP Nodwin Gaming Others

Source: Company Filings, Krafton Website and Spark Capital Source: Company Filings, Spark Capital

The prize pool is also a key determining factor that determines a player participation, Nodwin Gaming Game being organised at grassroot levels attracts a lot of local talent who are then elevated to higher
dominated the prize pool with ~73% share. levels depending on their competencies.

Nodwin Gaming Prize Money Prize Pool Locations/Cities Gamers Registered ('000s)
(USD mn)

2019-20 242 2019-20 6,900

2019-20 1.9
Others,
27% 2018-19 147 2018-19 2,200
2018-19 0.6
Nodwin 2017-18 11 2017-18 450
2017-18 0.2 Gaming,
73%
2016-17 5 2016-17 88
2016-17 0.1
0 100 200 300 0 5,000 10,000
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Underlying growth drivers for esports are strong; Nazara has a definite competitive edge
The esports arena in India saw competitive intensity rising on account of PUBG Ban (several other The entry of several media conglomerates indicates the underlying potential of the segment to attract
publishers such as Garena, Riot Games and Activision Blizzard became active) and the esports events the eyeballs of the millennials and Gen Z.
being limited to only online tournaments 35

Date Event 27
21
May-20 ➢ Airtel India esports tour by Nodwin Gaming 15
esports (Rs.bn)
10
Jun-20 ➢ Paytm First Games tie-up with Riot Games from Teamfight tactics tournament 7 8

Jun-20 ➢ Fnatic enters India focused content partnership with Loco

2019 2020 2021e 2022e 2023e 2024e 2025e
Aug-20 ➢ PUBG, the most popular esports game is banned in India

Sep-20 ➢ Dream Sports acquires esports tech start-up SoStronk Several big players are using esports as a marketing/promotional tool for their digital offerings and not
offering media rights to the other broadcasters limiting the impact on Nodwin gaming.
Oct-20 ➢ Reliance Jio enters the Esports market with Mediatek Tie-up
Media Partner Media Partner
Nov-20 ➢ Nodwin Gaming to host COD India challenge 2020

Dec-20 ➢ Activision Blizzard to partner with LOCO COD mobile.

Jan-21 ➢ Asus ROG tournament for PC games to continue

Mar-21 ➢ Krafton Inc invests in Nodwin gaming

Mar-21 ➢ Hungama and Hindustan Talkies invest in Indian Gaming League

Apr-21 ➢ MPL acquires esports company - GamingMonk

✓ PUBG Mobile World League 2020 was the most popular Krafton Inc to launch Battlegrounds Mobile India
Apr-21 ➢ Reliance Jio's Call of Duty Partnership Kicks off esports event in India, with 449k peak viewers of which 36% (Indian version of PUBG) in 2HCY21. Nodwin
streamed PUBG in Hindi Gaming where Krafton is a ~15% shareholder
Apr-21 ➢ MPL looks to extend E-Sports to Casual games ✓ Growth of esports in CY20 was impacted due to the ban on
should benefit from this launch.
PlayerUnknown’s Battlegrounds Mobile (PUBG), which was
May-21 ➢ Nodwin and Riot games partner for 2021 Valorant Champions Tour for the APAC region
India’s favorite esports app till it was banned.
Jun-21 ➢ PUBG Inda version Battlegrounds Mobile India to be launched ✓ Global gaming firms, such as Activision, Garena and Supercell,
which publish Call of Duty, Free Fire and Clash of Clans, are
Jun-21 ➢ Krafton invests in game streaming platform Loco lining up to invest in India’s esports ecosystem after PUBG
Mobile had to exit late last year due to the Indian
Jun-21 ➢ India Today gaming launches India's first-ever franchise-based Esports league featuring Free Fire government's clampdown on Chinese or China associated apps

Source: Company Filings, Spark Capital Source: Company Filings, Company Websites, FICCI, Industry Reports and Spark Capital

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 Sportskeeda viewership on the rise; monetisation to improve over time

Nazara owns ~74% of the subsidiary Absolute sports which owns
Intellectual The acquisition
• A leading sport and eSports news destination the sports platform Sportskeeda
Property website with content across WWE, eSports,
cricket, soccer and basketball 471740 shares of
• ▪ Largest eSports news destination in India Nazara Rs.mn Nazara Technologies
Technologies, were offered at Rs.728
74% Cash consideration 105 per share
Srinivas Rowjee
Market Share: Cuddapah, 2%
Monthly Average
According to comscore Target Demographics: Issue of equity interest 343
Users: FY21: 42.36mn Nazara Technologies
report, Sportskeeda is eSports fans & sports
MAUs and 87.97mn currently holds 140173
the 2nd largest sports spectators Total Consideration paid 448
visits per month Absolute ESOP shares of Absolute Sports
website in India
Trust, 2% Net Cash at the time of
125
Acquisition
Monetization: (1) Programmatic Ad inventory monetisation through FY21
automated demand channels Acquisition EV 287
(2) Partnership with game publishers and brands offering audience Porush Jain, EV/Sales (x) 1.1
engagement consultancy and high quality sports content in addition to the Stake Acquired 74.3%
23%
reach on the platform EV/EBITDA (x) 2.6

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

With improved monetization, the EBITDA margins should remain We have projected in for a revenue CAGR of ~25% over the next 5 “They have delivered growth in revenue because of 487% increase in their
~40%+ levels over the medium term. years for Sportskeeda, lower than the overall growth. monthly active users in one year and they've really looked at how to leverage
1.4 50% the ad inventory maximization through a small shift in the value-volume
42% 43% 43% 44% 44%
42% 45% 28% 27% equation between India and US, and also have really very strongly optimized the
1.2 26%
40% -- their interactions and their integrations with -- for the programmatic
23% revenues. So this has been a very, very notable performance by the Sportskeeda
1.0 Nazara 35% 20%
Investment team.”
30% 18%
0.8 “On Sportskeeda, it is very simple, how many visitors growth is happening, how
25%
1.2 much of time spent is happening and what's your distribution range of time
0.6 20%
14% spent. That is on the user side. And on the revenue side is the, what is your cost
12% 1.0 9% 8%
0.4 15% 8% 7% of inventory, what is the revenue, which you are generating from every
0.8 7% 6%
5% 0.6 10% inventory, which we call ECPM, and how is that really moving and changing. So
0.2 0.5 combination of these three metrics really help us in Sportskeeda”
0.4
0.1 0.2 0.1 5%
0.0 0% Mr.Manish Agarwal, Group CEO, Nazara Technologies
FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e FY21 FY22e FY23e FY24e FY25e FY26e eCPM: eCPM is calculated by dividing the ad revenue by the number of ad
impressions and then multiplying the quotient by 1000.
Revenue (Rs.bn) EBITDA margin (%) Revenue contribution (%) EBITDA contribution (%)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 Sportskeeda viewership on the rise; monetisation to improve over time

The sports genre in India is a superlative proposition for Indian The viewership share though remains largely in favour of Cricket, Digital mediums among the sports genre have been gaining
advertisers given that sports in India can be marketed uniformly viewership of other sports gaining pace. momentum in the past few years…
across the country
Others 0.2%
16% 4.0% 1.8%
16.0% 15% 3%
10.9% 16.7% 12.8%
Soccer
12.0% 3%
Cricket
8.0% Kabaddi 79%
8% 85.1% 81.5% 87.0%

4.0% 3.2%
1.9% Wrestling
7%
0.0%
2019 2020 2018 2019 2020
Sports genre Viewership share (%) Sports genre Advertisement Share TV Digital Print

Source: FICCI,Spark Capital Source: FICCI, Spark Capital Source: FICCI, Company Filings, Spark Capital

The current monetization of the

…which should benefit Sportskeeda given that it is one among the top 3 gaming and sports destinations for advertisers
application is predominantly from the
Cricbuzz Cricinfo Sportskeeda Cricbuzz Cricinfo Sportskeeda North American market
Digital
Category Ranking ESPN Digital Nazara
Platform Publisher Times Internet
Media Technologies Banner
0.08 0.11 0.08
Gaming and Impressions/Month (Rs/Impression)
Cricbuzz 1 91 92.4 50
Sports (mn)
Article
ESPN Gaming and Average Clickthrough 125000
2 0.003 NA 0.003 (Rs/Article)
Cricinfo Sports Rate (CTR)
Cricket, WWE, Roadblock
Gaming and 1150000 700000
Sportskeeda 3 Football, Tennis, (Rs/Day)
Sports Sports showcased Cricket Cricket
esports,
Gaming and Basketball, GTA Packages
Candycrush 4 4,500,000 5,000,000 1,500,000
Sports English, Hindi, (Rs/Package)
English, Hindi
Tamil, Kannada,
Gaming and Language (only English, Hindi Native Ad 0.4 (Premium
Ludo King 5 Telugu, Marathi 0.01 0.10
Sports commentary) (Rs/Impression) Media)
and Bengali

Source: Respective company websites, media planner websites and Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#7 Sportskeeda viewership on the rise; monetisation to improve over time

The number of visits per month and average session duration has Cricket remains the driver of viewership for sportskeeda, it is the As per the google trends scorecard, Sportskeeda related searches in
been on the increase for sportskeeda only popular website that hosts esports and WWE India were predominantly for non-cricket relates sports queries
Related topics with the biggest increase in search frequency
% increase
over the last 5 years (Search term: Sportskeeda)
70 228 250 Others, 20% WWE, 17%
199 Dream11 Breakout
60
200 T10 League Breakout
50 143 Professional wrestling Breakout
esports, 4%
129 150 Rio de Janeiro Breakout
40
Roman Reigns Breakout
30 59 100 Kerala Blasters FC Breakout
47
20 Jakarta Palembang 2018 Asian Games Breakout
29 34 50
10 Sports journalism Breakout
Kabaddi 1150%
0 0
Prediction 850%
FY18 FY19 FY20 FY21
Indian Super League 200%
Visits/Month (mn) Average Session Duration (Sec) Cricket, 59% WWE 170%
NXT 160%
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Sportskeeda 150%
FC Barcelona 120%
The overall popularity of the website has significantly risen, which we believe is on account of rise of esports in India Football 50%
WWE SmackDown 40%
Results marked "Breakout" had a tremendous increase Source: Google Trends
esports should be a key traffic driver for Sportskeeda in the
Nazara medium to long term
Investment

Source: Google Trends, Spark Capital Source: Company Website, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#8 Kiddopia to be the revenue and profitability growth engine over the medium term
Nazara Technologies holds~51% of Paperboat apps private limited The acquisition was done in FY20, as per FY21 numbers, the
Intellectual Application overview: Target which owns the gamified early learning application called Kiddopia valuation of the entity was 0.9x sales.
Property Self-directed learning Demographics:
experience through Children Aged 2-7 597528 shares of
gamification Years Rs.mn Nazara Technologies
Anshu
Dhanuka, were offered at Rs.728
Cash consideration 400 per share
24.5%
Application Monetization:
Publisher: Geography: Present in Subscription based Issue of equity interest 435
Nazara Nazara Technologies
Paperboat Apps 4 geographies (Per Month - US$6.99;
currently holds 5422
Private Limited Per Year - US$59.99) Technologies, Total Consideration paid 835
shares of Paperboat Apps
50.9%
Net Cash at the time of at Rs.154,000 per share
95
Acquisition
Marketed Competitors:
Android Playstore and Anupam Acquisition EV 740
through: Google, ABCmouse, EPIC, FY21 EV/SALES – 0.9x,
IoS App Store ratings: Dhanuka,
Facebook and app Adventure Academy, FY21 EV/EBITDA – 12.3x
4.1/5 and 4.4/5 24.5% Stake Acquired 51%
stores PBS Kids games

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

Revenues and margins have improved significantly post the With an underlying revenue CAGR of ~48% with EBITDA margins Accounting for all the trials cumulatively from FY19 to FY26, only
investment by Nazara technologies inching upto ~14% over the next 5 years ~17% of the addressable population would have sampled the
14.0 20% 70% offering by FY26
62%
14% 10.0 20%
12.0 12% 12% 13% 15% 60% 58% 58%
17%
10% 53% 53%
8% 7% 8% 49% 48%
10.0 10% 50% 8.0
44% 15%
8.0 5% 39% 38% 11%
40% 6.0
6.0 Nazara 12.3 0% 28% 7% 10%
30%
-6% Investment 21% 4.0 8.0
4.0 8.3 -5% 5%
-11% 5.6 20% 3% 5.3 5%
2.0 3.8 -10% 2.0 1% 3.5
0.0 0.0 0.2 0.6 1.8 2.6 10% 2.2
1.3
0.0 -15% 0.0 0.7 0%
FY17 FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e 0% FY21 FY22e FY23e FY24e FY25e FY26e
FY21 FY22e FY23e FY24e FY25e FY26e
Net Revenue (Rs.bn) EBITDA margin (%) Cumulative Trials % of the addressable North America Population
% of Income % of overall EBITDA
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#8 Kiddopia to be the revenue and profitability growth engine over the medium-term
Geographical expansion will be keeping in mind the probable The underlying opportunity is humongous; we anticipate kiddopia
LTV/CAC that can be achieved in those markets Kiddopia ratings have significantly shot up in the last 2 years…
to gain mileage by taking share from its competitors
30 27 2017 2018 2019 2020
ABCmouse.com ABCmouse.com ABCmouse.com ABCmouse.com
25
Nick Jr EPIC PBS KIDS Games EPIC
20
Adventure
PBS KIDS Video PBS KIDS Games EPIC
15 13 Academy
10 ABC Kids PBS KIDS Video Noggin Kiddopia
10
4 PBS KIDS Games Nick Jr PBS KIDS Video PBS KIDS Games
“We have launched German around two months back and we have seen that 5
0.2% 0.3% 0.6% 0.6% Peppa Pig: Paintbox Noggin GoNoodle Noggin
we are still not able to find a product market fit in terms of LTV CAC. So the
experiment iterating what needs to be done both on on-boarding funnel and 0 EPIC GoNoodle Homer Reading GoNoodle
the consumer engagement is still on. And it is not a foregone conclusion Global Market US Market Global Market US Market
Starfall ABC Kids Nick Jr PBS KIDS Video
either way. And our expansion into Spanish and French is something we will Size Nazara Share (%)
pick it up after we have really kind of -- again a conclusive call on German. Noggin Starfall Kiddopia Kids A-Z
Then only we will get into it.” Mr.Manish Agarwal, Group CEO, Nazara Tech 2020 2023e Kids A-Z Homer Reading Pinkfrog baby shark Khan Academy Kids

Source: Company Filings, Spark Capital NA: North America, Source: Company Filings, Spark Capital Source: Industry Reports, Spark Capital

…on the back of its content strength. The segment is competitive with Age of Learning Inc dominating the market with its ABCMouse.com and Adventure Academy applications.
Monthly Monthly
Target Age Yearly playstore ios
Application Company App Feature Free Period Minimum Maximum Languages offered Subjects covered
Group Subscription Ratings ratings
Subscription Subscription
Interactive Learning Reading & Language, Math, The Science and Social Studies,
ABCmouse Age Of Learning Inc, 2-8 One Month 6.99 USD 9.99 USD 79.99 USD English and Spanish 4.4 4.1
Application Art & Color and Role Play
English, Hindi, Japanese, Audiobooks, 'read-to-me' books, Spanish books, chinese
EPIC Kids Epic Creations Books for Kids 2-12 EPIC basic 6.99 USD 9.99 USD 73.99 USD 4.4 4.5
Korean, Chinese books, Quizzes and Learning videos
Adventure Interactive Learning
Age Of Learning Inc, 8-13 One Month 9.99 USD 12.99 USD 79.99 USD English 4.2 3.8 Reading, Math,Science and Social Studies, RolePlay
Academy Application
Interactive Learning General Knowledge, Math, Language, Creativity, Role
Kiddopia Paperboat Apps 2-7 One Week 6.99 USD NA 69.99 USD English and German 4.1 4.4
Application Playing.
Public Broadcasting Games with
PBS Kids Games 3-8 Free In-app purchases English 4.7 3.9 Games based on Science, Math, Reading and Arts
Service Educational message
Educational shows,
Noggin Viacom International inc 2-6+ One Week 7.99 USD NA NA English, Spanish 3.3 3.5 Rhymes, Arts, Math, Alphabets
books and games
Khan Academy Interactive Learning
Khan Academy 2-8 Free NA NA NA English 4.7 4.7 Reading, Math, language, Puzzles, logic
Kids Application
Source: Company Websites and Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#8 Kiddopia to be the revenue and profitability growth engine over the medium term
Card and Cricket games are the prominent offerings from the Indian publishers; Multi games platform such as MPL, Paytm and Winzo gaining strong tractions

Revenue Model Formula FY20 FY21 FY22e FY23e FY24e FY25e FY26e
A Number of Trials (mn) 0.3 0.4 0.6 0.9 1.3 1.9 2.7 Apple iOS contributes to 93% of customer base
B Increase in number of trials (%) Assumption 60% 45% 45% 45% 45% 45%
C Trials conversion ratio (%) Company Filings + Assumption 70% 70% 70% 70% 70% 70% 70%
D New Subscriber Addition (mn) A*C 0.2 0.3 0.4 0.6 0.9 1.3 1.9
E Monthly Churn (%) Company Filings 6% 6% 6% 6% 6% 6% 6% Lead Key performance Indicator
F Yearly Churn (%) E*12 75% 75% 75% 75% 75% 75% 75%
G Retention ratio (%) 1-F 25% 25% 25% 25% 25% 25% 25%
H Retained Subscribers (mn) G*D (previous year) 0.0 0.0 0.1 0.1 0.2 0.2 0.3

30% Annual Subscribers at USD 59.99/year and 70% monthly

I Paid subscriber base (mn) D+H 0.20 0.34 0.50 0.73 1.05 1.52 2.21 subscribers at USD 6.99/month
growth (%) 274% 72% 47% 45% 45% 45% 45%
J ARPU (USD) 41 72 72 73 74 76 77
Lead Key performance Indicator
growth (%) 76% 1% 1% 2% 2% 2%

K Gross Revenue (Rs.mn) I*J*72 582 1758 2610 3823 5626 8321 12307 90% of revenues derived from North America
growth (%) 48% 46% 47% 48% 48%
L Gross Revenue (Less: Annual Sub@20%) K*(1-20%) 1407 2088 3058 4501 6657 9845
Annual subscriber revenue recognition is deferred
growth (%) 48% 46% 47% 48% 48%
M Commission (Rs.mn) L*28% 163 394 585 856 1260 1864 2757
Payable to the App Stores - Fixed as ~28% of revenues
% of gross revenue 28% 28% 28% 28% 28% 28% 28%
N Net Revenue (Rs.mn) L-M 419 1013 1504 2202 3241 4793 7089
O Cost of Subscription (Rs.mn) P*A 403 786 1141 1591 2214 3210 4655
% of gross revenue 69% 45% 44% 42% 39% 39% 38% Lead Key performance Indicator
P Cost Per trial (USD) Assumption 21 26 26 25 24 24 24
Includes employee cost
Cost per subscription (USD) O/I 28 32 32 30 29 29 29
Q Content Cost (Rs.mn) N*10% 51 101 150 220 324 479 709 “We have done our experiments of very high spends, very low spends,
% net revenue 10% 10% 10% 10% 10% 10% 10% and we understand our sweet spot of the marketing spends. And our
view is that it has to be a balance between net new subscriber growth
EBITDA N-O-Q -35 126 212 391 703 1103 1725 and the EBITDA margins. So we don't see it going into a negative
EBITDA Margin (%) 7.1% 8.1% 10.2% 12.5% 13.3% 14.0% territory at all.” Mr.Manish Agarwal, Group CEO, Nazara Technologies
Source: Company Filings, Spark Capital Page 55
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#9 Nazara Technologies' ‘Freemium’ IPs are its moat; increase in In-app purchases to drive growth
Nazara Technologies owns ~52% of Nextwave Technologies which The freemium segment revenues, which faced a minor blip in FY21,
Freemium is Free to drives majority of the freemium segment revenues of Nazara should rebound strongly led by In-App Purchases
Intellectual Properties download games from Technologies
Google play and App 3263 shares of Nazara
store Rs.mn Technologies were
Nazara offered at Rs.6834 per
Cash consideration 300 share
R Kalpana, 3% Technologies,
Target
52% Issue of equity interest 22
Demographics: Nazara Technologies
Players aged 15-35 currently holds 17460
years and Children PR Jayashree, Total Consideration paid 323 shares of Next Wave
17% Technologies at Rs.18475
Net Cash at the time of
45 per share
Acquisition
Type of gamers : Competitors: FY19 FY20 FY21
Monetization: Ads Acquisition EV 277
and In-app Casual to mid-core Jetsynthesys, Stick EV/Sales
1.1 1.4 3.1
Purchases gamers and children Sports, Zapak Games (x)
PR Rajendran, Stake Acquired 52.4%
EV/EBITDA
28% 6.2 4.2 13.1
(x)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

The segment growth to be lower than the overall growth as Nazara “The reason we are not seeing immediate growth in terms of revenues or scale-
The revenues have been on a steady improving trend; margins
looks to improve Lifetime Value (LTV) of a customer before up in users is because our very strong focus is on achieving a positive lifetime
should gain momentum as Customer Acquisition Cost (CAC) is fixed
engaging in inorganic subscriber acquisition spree. value versus cost of customer acquisition equation in this model. the biggest
revenue drivers for the freemium business will come through in-app purchase
600 40% 7.3%
33% 6.9% 6.8% and not advertising, which is where the team is working on getting the in-app
35% 6.0% purchase conversions scaled up. They released WCC 3, which was the new
500 29%
5.3% version of the game after WCC 2 about six months back. And in the last six
27% 30% 4.9%
24% 25% months, we have seen in-app purchase conversion increase from 0.01% of daily
400 23% 4.3% 4.1% active users to now almost 0.10% of daily active users. It's almost an 10x
21%
Nazara 25% 3.7%
18% Investment 3.3% increase. However to get a positive LTV CAC, we still need to further increase
300 20% 2.9% this and the team is actively working on iterations to achieve this goal. The
14% 2.5%
15% other thing is, nearly 100,000 free downloads of WCC from the app stores. And
200 therefore we have sufficient scale to be able to simulate and deploy our
10% iterations to achieve our object of positive LTV. Once we have achieved that
100 goal, you will find that like in the case of Kiddopia that we did, we will
5%
152 244 198 195 244 293 351 422 506 significantly accelerate the spends for acquiring the user base and scale the user
0 0% FY21 FY22e FY23e FY24e FY25e FY26e
base significantly. So I think that is what we are working on because it's a scope
FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e of our DNA that we do not like to chase vanity metrics by burning money. We
Revenue Contribution (%) EBITDA Contribution (%)
would like to first bring our unit metrics in control and then only scale.”
Net Revenue (Rs.mn) EBITDA margin (%)
Mr.Nitish Mittersain, Joint Managing Director
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#9 Nazara Technologies' ‘Freemium’ IPs are its moat, increase in In-app purchases to drive growth
Majority of revenues are driven by advertising today which are The Most popular games of Nextwave includes World Cricket The In App Purchase (IAP) conversion as a % of Daily Active Users
placed by the platform operators. In App Purchases can materially Championship (WCC) franchise and Real Carrom (DAUs) should nearly double for a positive LTV/CAC
alter the profitability. Google Play Store Google Play Store
Cricket Freemium Games Metric Current Breakeven
Downloads (mn+) Ratings (out of 5)
Monthly Average Users 13 13
World Cricket Championship 3 10 4.1
World Cricket Championship 2 50 4.3 Daily Average Users 2 2
WCC Rivals 1 NA IAP Conversion 0.13% 0.23%
WCC Lite 5 4.0
In-App Sales Advertising Big Bash Cricket 5 4.1 Paid Subscriber Base (000s) 2.6 4.6
11% 89% Battle of Chepauk 2 10 4.4 IAP per paid subscriber 626 626
World Cricket Championship (free) 50 4.1
IAP revenues 20 35
Real Carrom 10 3.8
World Table Tennis Champs 1 3.9 IAP/MAU 1.5 2.7
Goat & Tigers 2 NA NA Cost of acquisition per subscriber (assumed) 2.7 2.7
WCC Rivals cash tournament NA NA

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital LTV: Life Time Value, CAC – Customer Acquisition Cost Source: Company Filings, Spark Capital

The IAP conversion metrics are all inching up post the launch of WCC 3 which has better monetisation engines and more engaging game play Though early days, opportunities of esports tournament on Cricket
is exciting
60 0.12% 1,830 1,643
55 0.10% 1,630
55 0.10%
1,430
50 0.08% 1,230
45 1,030
45 0.06%
830
40 0.04% 630
400
430
35 0.02% 0.01%
230
30 0.00% 30
WCC2 WCC3 WCC2 WCC3 Pre WCC 3 Post WCC 3

Number of Minutes Spent per day IAP Conversion (% of DAU) IAP Revenue/Day

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 57
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#9 Nazara Technologies' ‘Freemium’ IPs are its moat; increase in In-app purchases to drive growth
Nazara dominates the Cricket freemium game roster in India; the top 4 games (by downloads) belong to Nextwave Technologies; EPIC Cricket is part of the associate Moong Lab technologies in which Nazara owns
~24.4% stake. JetSynthesys, with the acquisition of Nautilus mobile in October 2020, is the other prominent player in this segment.

Game Publisher Installs (mn+) Playstore Ratings Size of the Application In-app Products
World Cricket Championship 2 Nextwave Multimedia 50 4.3 75MB $0.99-59.99
Free World Cricket Championship Lt Nextwave Multimedia 50 4.1 49MB $0.99-4.99
Chennai Super Kings - Battle of Chepauk 2 Nextwave Multimedia 10 4.4 73MB $0.99-2.99
World Cricket Championship 3 Nextwave Multimedia 10 4.1 89MB $0.99-104.99
Epic Cricket Nazara Games 10 4.1 38MB $0.99-12.99
Real Cricket 20 JetSynthesys 10 4.2 75MB $0.99-144.99
T20 Cricket Champions 3D Zapak Games 10 4.0 74MB $0.99-4.99
Real Cricket GO JetSynthesys 10 3.9 58MB $0.99-6.99
Sachin Saga Cricket Champions JetSynthesys 10 4.0 62MB $0.99-99.99
World Of Cricket: World Cup 2019 AppOn Innovate 10 4.1 16MB $0.99-43.99
MSD: World Cricket Bash Hungama Games 10 4.3 127MB $0.99-15.99
Real Cricket 17 JetSynthesys 10 4.2 34MB $0.99-99.99
Gully Cricket Game Games2win 5 4.0 37MB $0.99-3.99
Smash Cricket Moonfrog 5 4.1 20MB $0.99-373.27
Big Bash Cricket 2020 Nextwave Multimedia 5 4.1 59MB $0.99-35.99
Stick Cricket Premier League Stick Sports Ltd 5 4.2 26MB $0.99-22.99
Stick Cricket Super League Stick Sports Ltd 5 4.4 Varies with device $0.99-99.99
World Cricket Championship Lt Nextwave Multimedia 5 4.0 56MB $0.99-49.99
World Cricket Battle 2 Creative Monkey Games 5 3.8 60MB $0.99-54.99
Smashing Cricket Athang Cricket Games 5 4.1 41MB $0.99-94.99
Doodle Cricket Built on Google AI tool 1 4.4 1.6MB NA
WCC Rivals - Realtime Cricket Multiplayer Nextwave Multimedia 1 NA Varies with device $0.99-199.99
Real Cricket 16: English Bash JetSynthesys 1 3.8 35MB $0.99-99.99
HW Cricket Game '18 Hitwicket Cricket Game 18 1 3.2 75MB $0.99-159.99
Real Cricket Champions League JetSynthesys 1 4.0 26MB $0.99-2.46
Bat Attack Cricket Nextwave Multimedia 0 3.7 NA NA
Beach Cricket Nextwave Multimedia NA NA NA NA
Source: Company Filings, Spark Capital Page 58
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#10 Others – Halaplay revenue growth to be limited; focus shifts to profitability

Nazara Technology had increased its holding to ~74% as there was a Real money gaming business for Nazara is predominantly about
With the acquisition difference with the Halaplay promoters over the business model of Halaplay fantasy sports and BigPesa betting in Kenya
Intellectual Properties of Halaplay Halaplay. Stake subsequently diluted to accommodate a new investor.
Technologies, and
investments in 80% 74%
Sports Unity, the 70% 65%
Company 60% 55%
is participating in Other India
sports fantasy 50% 2%
38% Halaplay
gaming and trivia 40% 31% India
games 30% Kenya
88%
10%
20%
Distribution: 10%
Type of gamers : Sports
Monetization: Platform feed, including audio, Agreements with
technology & marketing 0%
Fee (Specified visual, data and textual
service providers Mar-19 Mar-20 Sep-20 Mar-21 Apr-21
percentage of total feed provided by official
gaming transaction) Distribution to manage
feed providers Nazara Technologies Holdings (%) in Halaplay Source: Company Filings, Spark Capital
large user traffic

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Application Features of the application Nazara Stake
We anticipate the revenue growth to be limited in this segment We anticipate the overall asset base to remain the same with no
while the losses reduce over a period of time Halaplay Technologies
additional CAPEX being invested Fantasy Sports App
426 (~65% stake)
380 1.0
0.9 Interactive contests including Khichadi Technologies
370 real money casual games (16.67%)
203 223 0.8
168 184 0.9
138 152 360
0.7 Real money quizzing Sports Unity (~63%
350 0.6 application stake - JV)
10 11
340 0.5
372 Real money quizzing Crimzoncode (~100%
-15 -17 -18 330 366 0.4
-58 application stake)
0.3
320
0.3 0.2
310 Real money carrom game 100% stake
0.1
-347 300 0.0
Real money quizzing Crimzoncode (~100%
FY20 FY21 FY22e FY23e FY24e FY25e FY26e FY20 FY21
application stake)
Total Assets (Rs.mn) Total Asset Turnover (x) Betting and Real Money Nz World Kenya
Real Money Games EBITDA (Rs.mn)
Casual games Limited (30% Stake)
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Source: Company Website, Spark Capital
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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#10 Others – Halaplay revenue growth to be limited; focus shifts to profitability

HalaPlay has ~1.4% share in a lucrative fantasy sports market that
…which has attracted several game publishers who are upfront loading marketing costs as customer acquisition strategy.
is anticipated to increase at a CAGR of ~32% between FY21-25…
Users Revenues EBITDA A&P as a % of
Fantasy Sports 2020 2025e CAGR Fantasy Sports Apps Publisher A&P (Rs.mn) Brand Ambassador(s)
(Mn) (Rs.mn) (Rs.mn) sales
Fantasy Sports Revenues (Rs.bn) 26 103 32% Dream 11 100 Sporta Tech Pvt Ltd 7,755 -1,566 7,851 ~101% MS Dhoni
MPL 60 Galactus Funware Tech 182 -2,976 1,397 ~768% Virat Kohli
Average Commission (~) 15% 15%
Paytm First games 45 Paytm 170 -999 358 ~210% Sachin Tendulkar
Gross Transaction Value (Rs.bn) 173 685 My Team 11 18 My Team 11 Fantasy sports 253 -48 198 ~78% Virender Sehwag
My 11 Circle 17 Play Games 24 X 7 14,177 4,641 5,081 ~36% Sourav Ganguly
Fantasy Sports Users (mn) 90 224 20%
HalaPlay 10 Nazara Tech 397 -308 67 ~17% Hardik & Krunal Pandya
% of paying users (~) 20% 25% Nostra Pro 8 Gambit Sports 49 -86 14 ~29% NA

Number of Paying Users (mn) 18 56 25% Howzat 7 Junglee Games 3,347 885 1,664 ~50% Yuvaraj Singh, Irfan Pathan, Pollard,
FanFight 6 Head Digital works 5,998 1,138 4,087 ~68% NA
Spend Per person per month (Rs.) 802 1024 5%
11 Wickets 4 Ability Games 26 -166 134 ~526% Sunny Leone

Source: Company Filings, Spark Capital Source: Company Filings, RoC filings and Spark Capital

The larger publishers dominate the cricket offerings across the The fantasy segment though has its regulatory hurdles as several “Sports Fantasy is a very large segment. However, there have been lot of issues at
globe with several sponsorships and associations. State governments have banned it. the state level in terms of the statutory risk which have led to closure of
Year of businesses in states like Andhra, Telangana, and Tamil Nadu and we are -- we
State Fantasy Gaming have taken a call in September 2019 to kind of not get into this binary risk nature
enactment
of this business. And our aim was to bring this company into profitable numbers
Tamil Nadu Not allowed Draft
but reduce the scale of revenues considerably. So our endeavour is that still the
Andhra Pradesh Not allowed 2020 binary risk in this segment is not covered, we will continue to look at a breakeven
kind of numbers and not go for scaling of the revenues, which may lead to lot of
Telangana Not allowed 2017 investment in this business, because the binary nature does not allow us to
become over-aggressive and we will continue to be strategically cautious in this
Gujarat Allowed 2016
segment.”
Nagaland License needs to be obtained 2016
“Infusion in Halaplay was to really kind of take a dominant shareholding in
Sikkim Restricted to servers in Sikkim 2009 Halaplay in line with the thought process and this is not an area where we would
like to burn money. We will not like to invest in massive amount of money in
Assam Not allowed 1970 brand building consumer acquisition. And the founders wanted to really look at a
new kind of the segment and not really look at a very wait and watch kind of a
Odisha Not allowed 1955
strategy. So we gave them exit and we invested into Halaplay and took the 75%
Meghalaya License required - majority.” Mr.Manish Agarwal, Group CEO, Nazara Technologies

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 60
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#10 Others – Telco subscription segment on a structural downturn

We anticipate revenues to decline over the medium-term with The contribution of the telecom business should eventually
margins remaining static become close to nil as consumers migrate away from value-added
Overview
1.8 60% mobile services
• Catalogue of Android and HTML5 games offered as value-add services
to telco subscribers, 1.6 49%
50% 210%
• ▪ Recently acquired non-exclusive global distribution rights for games 1.4
developed by Disney 38%
1.2 40%
1.0 128%
Geographic Footprint: 1,000+ Distribution: Strategic partnerships 25% 30% 112%
games offerings to mobile users in with multiple telecom operators, ▪ 0.8
18% 89%
58 countries through 52 telecom Acquisition also driven through 0.6 16% 16% 16% 16% 16% 20%
operators global & local ad networks 57%
0.4 23% 15%
10% 33%
0.2 16% 12% 9%10% 6% 7% 4% 5% 3% 3%
Monetization: Technology: Asset 1.5 1.0 0.8 0.7 0.7 0.7 0.6 0.6 0.6
Target Demographics:
Subscription based light model using 0.0 0%
Late adopters of
(Daily / Weekly / Nazara Content FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e
Internet, First-Time
Monthly) through Management Platform
gamers
carrier billing (NCMP) Revenue (Rs.bn) EBITDA margin (%) Revenue EBITDA

Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital

The segment revenues in India collapsed after Reliance Jio made With nil additional CAPEX investments needed and limited OPEX
value added services bundle free and reduced the data cost. needs, this segment should contribute to consistent cashflows.
MAJOR
36 2.15 TELECOM
347 PARTNERS

269
557 141% 1.40
375 1.18
1.09 1.08
224 “The strategic asset which we have is the relationship with 58 telcos in 52
345 347 247 72% countries and that is the pipelines which are there. And now we are really
324 63% 60% looking at how to leverage that asset by putting premium content like Disney
164 40% and Star Wars or e-sports content to see if we can really monetize that
325 180
577 229 distribution channels which we have created. And that's the endeavor for this
216 184 227 year and we are looking at if we can convert that into revenues. However, it's
very early for us to say and predict that whether that will lead to a growth in
FY17 FY18 FY19 FY20 RoCE TaT this segment, and hence we are maintaining that this would be a flat segment
for us and not a major growth driver.” Mr.Manish Agarwal, Group CEO, Nazara
India Middle east Africa APAC Iran FY17 FY18 FY19 FY20 FY21 Technologies
Source: Company Filings, Spark Capital Source: Company Filings, Spark Capital
Page 61
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Risks to our positive thesis

The Government of India (GoI) imposing regulations on

Subsidiary promoters wanting an exit, thereby depleting cash
online gaming and restricting certain games. More State
reserves and losing expertise in that business.
governments enforcing ban on Real Money Games (RMG)

Higher investments in the esports arena increasing the Unable to find suitable acquisition targets at reasonable
competitive intensity in the segment valuations thereby accumulation of cash on books

Any potential dilution by the subsidiaries leading to Nazara Emergence of free to learn apps in USA such as Khan
Technologies losing control of the subsidiary academy Kids and PBS disrupting Kiddopia’s growth.

Larger sports simulation game publishers such as Electronic Increased competitive intensity in the Sportskeeda business
Arts turning their focus on Cricket. leading to higher marketing spends

BCCI or other Cricket bodies wanting a share of the gaming Loss of partners in the esports business leading to growth
pie or launching their official cricket gaming applications. plummeting.

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 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230
Corporate Governance (1/2)
Key Managerial Person Salary and Remuneration Board of Directors

Remuneration (Rs.mn) Designation 2018 2019 2020 Name Designation

Mr. Vikash Mittersain Managing Director 5 6 6 Mr. Vikash Mittersain Executive Director-Chairperson related to Promoter-MD
Mr. Nitish Mittersain Joint Managing Director 25 27 28
Mr. Nitish Mittersain Executive Director-MD
Mr. Manish Agarwal CEO, Nazara Group 21 32 20
Mr. Rakesh Shah CFO 7 7 7 Mr. Kuldeep Jain Non-Executive - Independent Director
Mr. Vinav Agarwal Company Secretary 0 0 -
Ms. Shoba Jagtiani Non-Executive - Independent Director
Mr. Turabbhai Chimthanawala Company Secretary - - 0
Mr. Probir Roy Non-Executive - Independent Director
Mr. James Savio Saldanha CEO, Nazara Technologies FZ 20 16 -
Total 76 87 62 Mr. Sasha Mirchandani Non-Executive - Independent Director
% of revenues 4% 5% 2%
Mr. Rajiv Agarwal Non-Executive - Non Independent Director
% of employee cost 20% 21% 19%
Ms. Pratibha Mishra Company Secretary & Compliance Officer
% of PAT 285% 50% NA
Source: Company Filings and Spark Capital Research Source: Company Filings and Spark Capital Research
Related Party Transactions – FY21
Key Managerial Enterprises owned/ Associate of
Associates Joint ventures Others
Rs.mn Personnel controlled by KMP Subsidiary
Transactions:
Remuneration to key management personnel 71.58
Loans recovered 15.50
Loans given 4.50 -
Interest income 0.14 2.21
CSR expenses 5.13 2.50
Content -0.15
Advertisement income 0.50
Commission 0.09
Balances outstanding: 14.29
Trade payables 0.73
Receivable from selling shareholders 56.55
Loan given 4.50
Interest income receivables 0.12
Payable to selling shareholders 66.72
Trade receivables 0.08

Source: Company Filings and Spark Capital Research

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230
Corporate Governance (2/2)
Audit Committee Nomination and Remuneration Committee Stakeholders Relationship Committee Corporate Social Responsibility Committee

Mr. Sasha Mirchandani (Chairperson) Mr. Probir Roy (Chairperson) Ms. Shoba Jagtiani (Chairperson) Dr. Vikash Mittersain (Chairperson)
Board members
composition in various Mr. Nitish Mittersain Ms. Shoba Jagtiani Mr. Probir Roy Mr. Nitish Mittersain
committees
Mr. Probir Roy Mr. Kuldeep Jain Mr. Vikash Mittersain Ms.Shobha Jagtiani
Ms. Shoba Jagtiani

(In Rs.mn) 2017 2018 2019 2020

Capital and other Cost of content and other commitments NA 23 9 0
commitments
Bank guarantee NA 16 16 17
as % of net worth NA 1.1% 0.6% 0.3%

(In Rs.mn) 2017 2018 2019 2020

Corporate Social Amount Required to be spent 7.3 6.3 3.4 3.5

Responsibility Spend
Amount Spent 4.8 1.3 3.2 2.5
Amount Spent/ Required 65% 21% 94% 72%

(In Rs.mn) 2017 2018 2019 2020

Audit fee NA 16 9 8
Audit Fees
For other services NA 18 7.1 0.0
Total % of sales NA 2.0% 0.9% 0.3%

2017 2018 2019 2020 2021

Statutory Auditors S.R. Batliboi & Associates LLP S.R. Batliboi & Associates LLP S.R. Batliboi & Associates LLP Walker Chandiok & Co. LLP Walker Chandiok & Co. LLP

Auditors Company Secretary NA Vinav Agarwal Turab H. Chimthanawala Turab H. Chimthanawala Pratibha Mishra

Name of the Nazara Zambia Nzmobile Nigeria Nzmobile Kenya Nazara Uganda NZWorld Kenya Nazara Nazara Pro CrimzonCode Moonglabs Sports Unity
entity Limited, Limited, Limited, Limited, Limited, Bangladesh Gaming Tech Technologies Technologies Private Limited

Auditors Client Focus Moore Stephens Baker Tilly Abet & Baker Tilly Ahmed Zaker & Jogin Raval & Hetal V Shah & Vishal Madan & Ashwani &
Solutions Rosewater Merali's Company Merali's Co. Associates Associates Co Associates
Source: Company Filings and Spark Capital Research
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 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Financial Summary
Abridged Financial Statements
Rs. mn FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e
Profit & Loss
Revenue 1,720 1,697 2,475 4,542 5,939 7,852 10,568 14,444 19,957
Gross profit 1,599 1,254 1,968 4,018 5,281 7,084 9,636 13,228 18,366
EBITDA 487 163 -57 452 584 828 1,230 1,837 2,699
Depreciation 82 195 263 355 264 245 228 212 198
EBIT 405 -32 -320 98 320 582 1,002 1,625 2,501
Other Income 99 164 155 143 188 206 227 252 283
Interest expense 18 14 12 9 6 6 6 6 6
Exceptional items -357 0 0 -41 0 0 0 0 0
PBT 843 118 -178 273 502 782 1,222 1,871 2,778
Reported PAT (after minority interest) 27 175 -21 92 211 305 453 669 971
Adj PAT 57 175 -21 127 211 305 453 669 971
EPS (Rs.) 2.2 6.4 -0.8 4.2 6.9 10.0 14.9 22.0 31.9
Balance Sheet
Net Worth 3,518 4,071 5,071 6,582 6,793 7,098 7,550 8,219 9,190
Employee Benefit Obligation 99 76 388 260 260 260 260 260 260
Total debt 0 0 0 0 0 0 0 0 0
Other liabilities and provisions 585 454 877 1,250 1,250 1,250 1,250 1,250 1,250
Total Networth and liabilities 4,202 4,601 6,337 8,091 8,302 8,608 9,060 9,729 10,699
Gross Fixed assets 53 63 79 84 94 106 118 133 148
Net fixed assets 150 103 109 39 39 39 39 39 39
Capital work-in-progress 0 0 0 0 0 0 0 0 0
Intangible Assets 1,358 1,274 3,432 2,947 2,693 2,459 2,244 2,046 1,864
Investments 949 927 455 1,060 1,060 1,060 1,060 1,060 1,060
Cash and bank balances 1,175 1,333 1,867 3,724 4,153 4,666 5,296 6,110 7,187
Loans & advances and other assets 230 537 342 429 429 429 429 429 429
Net working capital 339 427 132 -107 -71 -45 -8 45 121
Total assets 4,202 4,601 6,337 8,091 8,302 8,608 9,060 9,729 10,699
Capital Employed 3,518 4,071 5,071 6,582 6,793 7,098 7,550 8,219 9,190
Invested Capital (CE - cash - CWIP) 1,395 1,812 2,749 1,798 1,580 1,372 1,194 1,049 942
Net debt -2,124 -2,259 -2,323 -4,784 -5,213 -5,726 -6,357 -7,170 -8,247
Cash Flows
Cash flows from Operations (Pre-tax) 722 448 -33 527 384 492 680 972 1,391
Cash flows from Operations (post-tax) 32 192 -22 674 257 325 423 582 816
Capex 19 59 69 21 10 11 13 14 16
Free cashflows 13 134 -91 654 247 313 410 568 800
Free cashflows (post interest costs) 13 133 -91 654 241 307 404 562 794
Cash flows from Investing -183 -675 89 -2,675 178 194 214 238 268
Cash flows from Financing 371 59 34 2,171 -6 -6 -6 -6 -6
Total cash & liquid investments 2,124 2,259 2,323 4,784 5,213 5,726 6,357 7,170 8,247
Source: Company data, Spark Capital Research
Page 65
 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Financial Summary

FY18 FY19 FY20 FY21 FY22e FY23e FY24e FY25e FY26e

Growth ratios
Revenue -9.5% -1.4% 45.9% 83.5% 30.7% 32.2% 34.6% 36.7% 38.2%
EBITDA -20.3% -66.4% NA NA 29.1% 41.7% 48.6% 49.4% 46.9%
Adj PAT -90.7% 207.8% NA NA 66.4% 44.7% 48.3% 47.8% 45.1%
Margin ratios
Gross 92.9% 73.9% 79.5% 88.5% 88.9% 90.2% 91.2% 91.6% 92.0%
EBITDA 28.3% 9.6% NA 10.0% 9.8% 10.5% 11.6% 12.7% 13.5%
Adj PAT 3.3% 10.3% NA 2.8% 3.6% 3.9% 4.3% 4.6% 4.9%
Performance ratios
Pre-tax OCF/EBITDA 148% 274% 58% 117% 66% 59% 55% 53% 52%
OCF/IC (%) 2% 11% -1% 37% 16% 24% 35% 55% 87%
RoE (%) 2% 4% 0% 2% 4% 4% 6% 8% 11%
RoCE (%) 10.9% 2% -2.5% 3% 9% 12% 18% 26% 35%
RoCE (Pre-tax) 14% 3% -3% 4% 7% 11% 16% 23% 30%
RoIC (Pre-tax) 29% -2% -12% 5% 20% 42% 84% 155% 265%
Fixed asset turnover (x) 33 27 31 54 63 74 89 109 134
Total asset turnover (x) 0.4 0.4 0.4 0.6 0.7 0.9 1.2 1.5 1.9
Financial stability ratios
Net Debt to Equity (x) -0.6 -0.6 -0.5 -0.7 -0.8 -0.8 -0.8 -0.9 -0.9
Net Debt to EBITDA (x) -4.4 -13.8 41.0 -10.6 -8.9 -6.9 -5.2 -3.9 -3.1
Interest cover (x) 1.7 13.9 -1.8 74.6 42.9 54.1 70.4 97.0 136.0
Inventory days 0 0 0 0 0 0 0 0 0
Working capital days 378 295 393 291 5 5 5 5 5
Valuation metrics 1510
Fully Diluted Shares (mn) 25 27 28 30 30 30 30 30 30
Market cap (Rs.mn) 38,265 41,402 41,907 45,983 45,983 45,983 45,983 45,983 45,983
P/E (x) 672.7 236.5 -1968.4 362.7 218.0 150.6 101.6 68.8 47.4
P/OCF(x) 1,450 239 -2,116 68 179 142 109 79 56
EV (Rs.mn) (ex-CWIP) 43,860 43,724 43,661 41,199 40,770 40,257 39,627 38,813 37,736
EV/ EBITDA (x) 90 267 -771 91 70 49 32 21 14
EV/ OCF(x) 1,383 227 -2,009 61 158 124 94 67 46
FCF Yield 0.0% 0.3% -0.2% 1.4% 0.5% 0.7% 0.9% 1.2% 1.7%
Price to BV (x) 11 10 8 7 7 6 6 6 5
Dividend pay-out (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Source: Company data, Spark Capital Research

Page 66
 NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Crystal Ball Gazing

Nazara revenues are likely to grow at ~35% CAGR over the next three years led by the gamified early learning business and the esports business. Operating margins to expand
from ~10% in FY21 to ~13.5% in FY26 led by operating leverage in the gamified learning business. We have derived our TP: Rs.3018 using Discounted Cash Flow methodology
(5% terminal growth rate and ~9% WACC assumption)

Contribution from gamified early learning and esports to be in Lack of incremental CAPEX and margin expansion should lead to The implied EV/EBITDA is ~31x while implied EV/Sales is ~4.2x
excess of 90% by FY26. capital efficiency improving on FY26 numbers

FY011-FY14 FY14-FY17 FY17-FY21 FY21-FY26E FY011-FY14 FY14-FY17 FY17-FY21 FY21-FY25E Implied P/E multiple FY25E EPS (Rs.) Price target
Revenues CAGR na na 24.3% 34.5% RoE (%) na na 7.6% 17.0% 80 32 2550
Gross Margin na na 85.8% 90.4% RoCE (%) na na 6.9% 6.0% 95 32 3018
EBITDA CAGR na na -7.3% 42.9% RoIC (%) na na 37.3% 38.5%
EBITDA margin na na 20.0% 11.4% Average 1 yr fwd
EPS CAGR na na -35.8% 50.2% PE (x)
Total Asset Turnover (x) na na 0.5 1.1 EV/EBITDA (x)
Total WC days na na 336 53 Peak 1 yr fwd
Pre-tax OCF/EBITDA (%) na na 146% 67% PE (x)
Post Tax OCF as a % of IC na na 40% 42% EV/EBITDA (x)
Debt/EBITDA na na -0.6 -0.8

Total
EPS CAGR of ~50%, exit Return of
Entry = Rs. 1510
Cumulative Dividends: NIL multiple of 95x (implied) on
@ 100x FY23E EPS 100%
FY26E EPS

Source: Company data, Spark Capital Research

Page 67
Appendix

Page 68
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Appendix Click here to go back to the gaming

sector thesis

The top Indian Game publishers are reliant on their flagship Transaction Based Game offerings, a few of them do have freemium games (casual). The freemium games are mostly based on localised content such as
Cricket, Carrom, Ludo and some role play games and on a simple interface

Real Money Games - Real Money Games -

Publisher Fantasy Sports Freemium Card Freemium Role Play Freemium Board Freemium - Cricket Freemium other sports Sports Website
Rummy/poker Others

Solitaire Pet Haven,

Rummy Circle, My11 Circle Pet Haven
Ultimate Teen Patti

Rummy King, Vegas

Ace2three Fanfight Teenpatti, Witty Casino, In- Cricket.com
between

Adda52 Poker, Adda52

LeagueADDA
Rummy

WCC 2, WCC 3, Rangpur

Chotta Bheem -12 Variants Real Carrom 3D, World
Riders Star Cricket, WCC Lt,
Qunami, Carrom Clash, Motu Patlu - 11 Variants Table Tennis Champions,
WCC Lite CSK - Official
WCC Rivals, Top Quiz, Halaplay Oggy & The Cockroaches - 2 Top Quiz, World Table Sportskeeda.com
League Game, Big Bash
Mobilebaazi Variants, Other Kid games - Tennis Champions, Top
Cricket - Official League
4 Quiz
Game, Epic Cricket
Teen Patti Gold, Rummy
Gold, Callbreak Gold,
Alia Bhatt: Star Life, Kalyug Ludo Club, Jalebi, Sholo
Andhar Bahar, Carioca Smash Cricket Carrom Gold
: Warriors of Magic Guti,
Club, Baloot Souk, 29 card
game

Junglee Rummy, Rummy

Howzat Junglee Teenpatti Eatme.io Kanche Games
Millionaire

Rummy Culture Gamezy Gamezy

PokerBaazi, RummyBaazi Baazi Mobile Gaming Ballebaazi

Teen Pati, Indian Rummy,

Tambola, Teen Patti Live, Snakes & Ladders, Don’t Let Soccer Battles, Carrom Live,
Play Rummy Gold 11 Yuddhbhoomi,
Octro Poker, Bhabho, Seep, me down, Ludo Live Donkey Quiz, War of Words
Call Break, Teen Patti Battle

Page 69
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Appendix Click here to go back to the gaming

sector thesis

Among the Indian publishers, we are excited about the multigame platforms such as Glactus Funware’s Mobile Premier League, Paytm’s Paytm First Games, Winzo from Tictok Skill Games and Nostragamus Nostro pro
which have a better monetization modus operandi given that they offer a wide gamut of games under the Real Money Games (RMG) platform

Real Money Games - Real Money Games -

Publisher Fantasy Sports Freemium Card Freemium Role Play Freemium Board Freemium - Cricket Freemium other sports Sports Website
Rummy/poker Others

Dress Up Fashion Styling, Car Games 3D Driving,

International Fashion Parking Frenzy 2.0, Car
Stylist, Decisions, Indian Parking Test Simulation,
Fashion Stylist, Super Gully Cricket Game - 2020 School Bus Simulator -
Wedding Stylist 2021, Driving Simulator Games,
Fashion Makeover, Home Driving Academy, Parking
Makeover, Friends Forever. Professor

Sporta Technologies Private

Dream 11, Power Predictor Carrom Live Fan Code
Limited

Teen Patti, Indian Rummy,

Poker Ace, Billionaire Ludo Kingdom, Carrom
Comfun, Solitaire

Teen Patti Royal, Poker

Zmist, FreeCell, Poker Ludo Royal
Offline

Sultan: The Game, Dhoom

3: The Game, Dhoom 3: Jet
Spellup
Speed, Fan: The Game, Star
Chef, Fantastic Chefs

Galactus Funware Tech Mobile Premeir League Mobile Premeir League Mobile Premeir League Mobile Premeir League Mobile Premier League Mobile Premeir League Mobile Premeir League Mobile Premeir League

Paytm First Games Paytm First Games Paytm First Games Paytm First Games Paytm First Games Paytm First Games Paytm First Games Paytm First Games

Winzo Winzo Winzo Winzo Winzo Winzo Winzo Winzo

Zupee Gold - Quiz

Page 70
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

Appendix Click here to go back to the gaming

sector thesis

The top Indian Game publishers are reliant on their flagship Transaction Based Game offerings, a few of them do have freemium games (casual). The freemium games are mostly based on localised content such as
Cricket, Carrom, Ludo and some role play games and on a simple interface

Real Money Games - Real Money Games -

Publisher Fantasy Sports Freemium Card Freemium Role Play Freemium Board Freemium - Cricket Freemium other sports Sports Website
Rummy/poker Others

MyTeam11

Rummy24.com,
11wickets.com Sports.info
Pokerlion.com

Brainbaazi

Qureka

Nostra Pro Nostra Pro Nostra Pro

Classic Rummy, Asli Rummy Khelyaar

Indigo Rummy, Taj Rummy,

Grid Logic Games Rummy Villa, Rummy
Central

Khelplay Rummy Khelfactory Khelchamps

Sachin Saga Cricket

Champions, Sachin Saga
VR, Real Cricket 20, Real
Cricket GO, Real Cricket
Being Salman, Cooking Premier League, Real
Super Ludo WWE Racing Showdown
Clash Cricket Aussie 20-20 Bash,
Real Cricket Champions
League, Real Cricket Test
Match, Real Cricket English
2020 Bash

Page 71
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Real money games – Top Card games and the financials of the respective publishers Click here to go back to RMG section

Real Money Games - Downloads Year of Financial Revenue EBITDA EBITDA PAT Valuation Valuation as
Ratings Publisher Location Key Investors
Rummy/poker (Millions+) Inception year (Rs.mn) (Rs.mn) Margin (Rs.mn) (USD mn) on
November
Rummy Circle 10 4.2 Play games 24x7 Mumbai 2006 FY20 14177 4641 33% 3512 509 The Raine Group, Tiger Global
2019
Burman Family Holdings, Clairvest, Khattar Group of
Ace2three 10 3.8 Head Digital Works Delhi 2006 FY20 5998 1138 19% 689 90 August 2018
companies, Midland States Bank
Junglee Rummy 10 4.2
Junglee Games Delhi 2010 FY20 3347 885 26% 673 132 March 2021 Flutter.com, 500 Startups, Bay Partners
Rummy Millionaire NA NA

Rummy Culture 1 4.4 Gameskraft Bengaluru 2017 FY20 4281 3009 70% 2289 NA NA NA

Khelplay Rummy 1 3.6 Sachar Gaming Mumbai 2012 FY20 299 0.8 0.3% 0.8 NA NA NA

Classic Rummy 0.5 3.6

Open play
Kolkata 2006 FY20 388 38 10% 27 NA NA NA
Technologies
Asli Rummy 0.01 2.9

Adda52 Poker 0.1 3.2

Delta Corp Goa 2011/2017 FY21 1834 211 11% NA NA NA Delta Corp
Adda52 Rummy 0.05 2.3

PokerBaazi 0.01 3.5 Moonshine

Delhi 2017 FY20 715 -180 NA -84 NA NA Udtara Ventures, Moonshine Technologies
NA NA Technology
RummyBaazi
Deccan Rummy 0.1 3.2 Deccan Games Bengalaru 2013 FY20 307 21 7% 14 NA NA NA

Play Rummy NA 3.4 Skillwin Technology Delhi 2016 FY20 1457 461 32% 369

Indigo Rummy NA NA

Taj Rummy NA 3.7 Grid Logic Games

Gurguon 2017 FY19 22 -3 NA -3 NA NA NA
NA NA Private Limited
Rummy Villa
Rummy Central NA NA
Base Partners, RTP Global, SIG, Go-Ventures, Telstra
Galactus Funware
Mobile Premier League 60 3.7 Bengaluru 2018 FY20 182 -2976 NA -2950 945 February-21 Ventures, Founders Circle, Sequoia Capital, Composite
Tech
Capital, Moore Strategic Ventures and Play Ventures
Paytm First Games 45 4.9 Paytm Noida 2018 FY20 170 -999 NA -967 100 April-20 PayTM, AGTech Holdings
Kalaari Capital Partners, Courtside VC, FinAdvantage,
December-
Winzo 30 4.6 Tictok Skill Games Delhi 2016 FY20 267 -271 NA -267 61.3 Makers Fund II Company Ltd, AngelList, Velo Partners and
20
others

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NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#5 Real money games offering - Casual Offerings Click here to go back to RMG section

Real Money Downloads Year of Financial Revenue EBITDA EBITDA PAT Valuation Valuation
Games Offered Ratings Publisher Location Key Investors
Games – Others (Millions+) Inception year (Rs.mn) (Rs.mn) Margin (Rs.mn) (USD mn) as on

Qunami Quizzing 0.4 NA

Nazara
Carrom Clash Carrom NA NA Mumbai 1999 FY21 4542 596 13% 136 NA NA Listed Company
Technologies

WCC Rivals Clash Cricket NA NA

Qureka Quizzing 10 NA
CoolBoots
Gurugram 2016 FY20 159 -178 NA -215 NA NA Times Internet (51%)
Media Pvt. Ltd
Qureka Pro Casual Gaming NA NA

Brainbaazi Quizzing 10 NA Times Internet Delhi 1999 FY20 11894 -332 NA -196 NA NA Bennett Coleman and Company Limited (~88%)

Sequoia, North Base Media, 3one4 Capital, Axilor,

Loco Streaming, Quiz 10 NA Pocket Aces Bengaluru 2017 FY20 NA NA NA NA NA NA
Surya Ventures, Aarin, ruventures
Indipepper January Matrix Partners, Falcon Edge Capital, WestCap Group
Zupee Gold Quiz 5 NA Gurugram 2013 FY19 3.5 -9.8 NA -9 105
Media Pvt Ltd 2021 and Orios Venture Partners
Baazi Mobile Moonshine
Casual Games NA NA Delhi 2017 FY20 715 -180 NA -84 NA NA Udtara Ventures, Moonshine Technologies
Gaming Technology

Khelfactory Casual Games NA NA Sachar Gaming Mumbai 2012 FY20 299 0.8 0.3% 0.8 NA NA NA

Fantasy Sports &

Gamezy NA NA Gameskraft Bengaluru 2017 FY20 4281 3009 70% 2289 NA NA NA
Casual Games
Base Partners, RTP Global, SIG, Go-Ventures, Telstra
Mobile Premier Cards, Fantasy & Galactus February-
60 3.7 Bengaluru 2018 FY20 182 -2976 NA -2950 945 Ventures, Founders Circle, Sequoia Capital, Composite
League Casual Games Funware Tech 21
Capital, Moore Strategic Ventures and Play Ventures
Paytm First Cards, Fantasy &
45 4.9 Paytm Noida 2018 FY20 170 -999 NA -967 100 April-20 PayTM, AGTech Holdings
Games Casual Games
Kalaari Capital Partners, Courtside VC, FinAdvantage,
Cards, Fantasy & Tictok Skill December-
Winzo 30 4.6 Delhi 2016 FY20 267 -271 NA -267 61.3 Makers Fund II Company Ltd, AngelList, Velo Partners
Casual Games Games 20
and others
Cards, Fantasy &
Nostra Pro NA NA Gambit Sports Bengaluru 2015 FY20 49 -86 NA -90
Casual Games

Page 73
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#6 Fantasy sports players and their financials Click here to go back to Fantasy Sport
section

Downloads Year of Financial Revenue EBITDA EBITDA PAT Valuation Valuation as

Fantasy Sports Apps Ratings Publisher Location Key Investors
(Millions) Inception year (Rs.mn) (Rs.mn) Margin (Rs.mn) (USD mn) on
Tencent, Steadview Capital, Tiger Global, TCV, D1 Capital
Dream 11 100 4.5 Sporta Tech Pvt Ltd Mumbai 2008 FY19 7755 -1566 NA -133.1 5000 March-21 Partners, Falcon Edge, Multiples, Kalaari Capital, TPG
Capital, Chrys Capital, Footpath Ventures
Base Partners, Beenext, RTP Global, SIG, Go-Ventures,
Galactus Funware Telstra Ventures, Founders Circle, Sequoia Capital,Times
MPL 60 NA Bangalore 2018 FY20 182 -2976 NA -2950 945 February-21
Tech Internet, Composite Capital, Moore Strategic Ventures
and Play Ventures

Paytm First games 45 4.9 Paytm Noida 2018 FY20 170 -999 NA -967 100 April-20 PayTM, AGTech Holdings, One97

My Team 11
My Team 11 18 NA Jaipur 2016 FY20 253 -48 NA -76 NA NA NA
Fantasy sports
November-
My 11 Circle 17 4.3 Play Games 24 X 7 Mumbai 2006 FY20 14177 4641 33% 3512 509 The Raine Group, Tiger Global
19

Hala Play 9 NA Nazara Tech Mumbai 2016 FY20 397 -308 NA -355 10 January-20 Nazara Technologies

Nostra Pro 8 NA Gambit Sports Bangalore 2016 FY20 49 -86 NA -90 NA NA Vereeni

Howzat 7 4.5 Junglee Games Delhi 2010 FY20 3347 885 26% 673 132 March-21 Flutter.com, 500 Startups, Bay Partners

Buramn Family Holdings, Clairvest, Khattar Group of

FanFight 6 4.6 Head Digital works Delhi 2006 FY20 5998 1138 19% 686 90 August-18
compnaies, Midland States Bank

11 Wickets 4 NA Ability Games Kolkatta 2018 FY20 26 -166 NA -115 NA NA NA

Moonshine
Ballebaazi 3 3.9 Delhi 2017 FY20 715 -180 NA -84 NA NA Udtara Ventures, Moonshine Technologies
Technology

Fanmojo Fantasy 3 NA Catapault NA NA FY20 NA NA NA NA NA NA U2opia Global

Real11 Fantasy
Real 11 1.8 NA Ghaziabad 2016 FY20 NA NA NA NA NA NA NA
sports

Gamezy 1 4.6 Gameskraft Bangalore 2017 FY20 4281 3009 70% 2289 NA NA NA

Sachar Gaming
KhelChamp 1 NA Mumbai 2018 FY20 299 1 NA 1 NA NA NA
Private Limited
Page 74
NAZARA TECHNOLOGIES| Initiating Coverage | Rating: BUY | TP: 2230

#Top Indian casual game publishers and their games Click here to go back to casual games
section
Card and Cricket games are the prominent offerings from the Indian publishers; Multi games platform such as MPL, Paytm and Winzo gaining strong tractions
Publishers Freemium Card Freemium Role Play Freemium Board Freemium - Cricket Freemium other sports
Sultan: The Game, Dhoom 3: The Game, Dhoom 3:
Jet Speed, Fan: The Game, Star Chef, Fantastic Spellup
Chefs
Teen Patti, Indian Rummy, Poker Ace, Billionaire
Ludo Kingdom, Carrom
Comfun, Solitaire

Ludo King, Sudoku King

Solitaire Pet Haven, Ultimate Teen Patti Pet Haven

Dress Up Fashion Styling, International Fashion Car Games 3D Driving, Parking Frenzy 2.0, Car
Stylist, Decisions, Indian Fashion Stylist, Super Parking Test Simulation, School Bus Simulator -
Gully Cricket Game - 2020
Wedding Stylist 2021, Fashion Makeover, Home Driving Simulator Games, Driving Academy,
Makeover, Friends Forever. Parking Professor
Sachin Saga Cricket Champions, Sachin Saga VR,
Real Cricket 20, Real Cricket GO, Real Cricket
Being Salman, Cooking Clash Super Ludo Premier League, Real Cricket Aussie 20-20 Bash, WWE Racing Showdown
Real Cricket Champions League, Real Cricket Test
Match, Real Cricket English 2020 Bash

Junglee Teenpatti Eatme.io Kanche Games

Teen Patti Gold, Rummy Gold, Callbreak Gold,

Andhar Bahar, Carioca Club, Baloot Souk, 29 card Alia Bhatt: Star Life, Kalyug : Warriors of Magic Ludo Club, Jalebi, Sholo Guti, Smash Cricket Carrom Gold
game
Chotta Bheem -12 Variants, Motu Patlu - 11 WCC 2, WCC 3, Rangpur Riders Star Cricket, WCC Real Carrom 3D, World Table Tennis Champions,
Variants, Oggy & The Cockroaches - 2 Variants, Lt, WCC Lite CSK - Official League Game, Big Bash Top Quiz, World Table Tennis Champions, Top
Other Kid games - 4 Cricket - Official League Game, Epic Cricket Quiz
Teen Pati, Indian Rummy, Tambola, Teen Patti
Soccer Battles, Carrom Live, Donkey Quiz, War of
Live, Octro Poker, Bhabho, Seep, Call Break, Teen Yuddhbhoomi, Snakes & Ladders, Don’t Let me down, Ludo Live
Words
Patti Battle
Teen Patti Royal, Poker Zmist, FreeCell, Poker
Ludo Royal
Offline

* Mobile Premeir League Mobile Premier League Mobile Premeir League Mobile Premier League Mobile Premier League

Paytm First Games Paytm First Games Paytm First Games Paytm First Games Paytm First Games

Winzo Winzo Winzo Winzo Winzo

Page 75
 Spark Disclaimer

BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year horizon
Absolute Rating
Interpretation
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year horizon SELL Stock expected to fall >10% over a 1-year horizon

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Spark Capital Advisors (India) Private Limited is a financial services company incorporated in India, with its registered address at 'Reflections' New No.2 | Leith castle center street, Santhome high road, Chennai-600 028

Spark Capital Advisors (India) Private Limited,'Reflections' New No.2, Leith castle center street, Santhome high road, Chennai-600 028 | Avior LLC | 733 Third Avenue, New York, New York 10017
Spark Capital Advisors (India) Pvt. Ltd. is a SEBI registered Research Analyst bearing SEBI Registration No. INH200001459 Page 77