rakesh jhunjhunwala: A stock held by Jhunjhunwala in the bear market could be the best bet for 2022
Much of the stock correction was attributed to profit taking by investors and cautiousness towards high value-added tech stocks amid rising interest rates and tightening markets. liquidity conditions.
That said, brokerage firm B&K Securities believes Nazara Technologies should be among the top bets for investors in 2022, given the unique opportunity it offers to play the electronic gaming revolution in India.
The brokerage firm has launched a hedge on the stock with a buy rating and price target of Rs 3,287, implying expected returns of almost 44% over the next 12 months.
“Market leadership positions across all verticals will enable robust revenue growth over the next decade as the gaming ecosystem continues to evolve,” B&K Securities analyst Deep Shah said in a note. .
Shah believes the company’s eSports vertical will become a transformative force in the years to come by leveraging its market leadership.
The strength of the eSports business and its leadership positions allow it to be awarded rich valuations, further supported by exponential growth, Shah said.
Nazara Tech originally started its business as a game aggregator whose business is steadily declining due to the advent of fourth generation telecommunications. In recent years, the company has focused on acquiring various businesses, but the game changer was the takeover of Nodwin Games in 2017-18.
Esports is still a nascent industry not only in India but globally, but is seen as a major industry going forward, especially as humans will be heading into the metaverse in decades to come. The success of games like Fortnite and platforms like Roblox has accelerated investor interest in this industry. Globally, the industry was worth $ 780 million in 2018, which is expected to grow to $ 1.6 billion by 2023.
B&K Securities also sees potential in Nazara Tech’s real money gambling operations, which offer an option, especially if the software as a service model is executed well. The brokerage firm believes that Nazara Tech’s acquisition of OpenPlay Technologies could mark the start of a new dawn in the real-money gaming industry.
Given the high visibility of growth and the absolute dominance of Nazara, B&K Securities attributed a sales valuation 16 times higher to the stock than in fiscal year 24.