Hold Nazara Technologies; target of Rs 396: Prabhudas Lilladher

What happened

Prabhudas Lilladher downgraded Nazara Technologies to HOLD with a target price of Rs 396. The broker cut its FY28E/FY29E EBITDA estimates by 5%/7% to refine margin assumptions for Kiddopia, SportsKeeda, and DataWrkz, after results broadly matched expectations.

Confirmed

Global impact / market context

A downgrade to HOLD means the broker sees limited extra upside after the stock rose 71% since its March-26 upgrade note. Lower profit estimates mean future earnings are expected to be smaller, which can make the current share price look more expensive relative to profits.

Analyst inference

Nazara's plan to scale gaming and sell non-core businesses like Nodwin and Ad-tech shifts its mix toward higher-growth areas, but execution risk rises. The stock trades at 27x/22x EV/EBITDA for FY28E/FY29E, a rich multiple that leaves little room for disappointing margins.

Analyst inference

What to watch

1. Watch whether margins at Kiddopia, SportsKeeda, and DataWrkz improve, since the broker cut FY28E/FY29E EBITDA estimates by 5%/7% on revised margin assumptions. Confirmed
2. Watch progress on scaling the gaming segment and opportunistically divesting non-core businesses such as Nodwin and Ad-tech, which the report says is the new leadership's pivot. Proposed
3. Watch sales and EBITDA growth from consolidating BT and BP games, which underpins the expected 38%/44% CAGR over FY26-FY29E and could justify the premium valuation if delivered. Analyst inference

Evidence

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