Brokerage firm Prabhudas Lilladher has downgraded Nazara Technologies to 'Hold' with a target price of Rs 396. The shift follows a 71% rally in the stock since March 2026, with the firm citing valuation limits and margin adjustments. Investors are now focused on the company's ongoing restructuring, which involves divesting non-core assets to scale its primary gaming business.
Prabhudas Lilladher has downgraded Nazara Technologies to 'Hold', noting that the stock's recent performance has left limited room for immediate upside. The brokerage established a target price of Rs 396, adjusting its view after the share price appreciated by 71% since March 2026. This rating change represents a tactical update rather than a negative shift in the company's long-term business potential.
Valuation and Margin Adjustments
The brokerage reduced its EBITDA estimates for fiscal years 2028 and 2029 by 5% and 7%, respectively. These revisions follow Nazara’s latest EBITDA margin of 14.9%, which slightly trailed the estimated 15.3%. While the company’s bottom line received support from non-operational items—specifically higher other income of Rs 137 million and a decrease in finance costs to Rs 38 million—the core operating margins remain a focus for analysts. At current levels, the stock trades at 27 times and 22 times its estimated EV/EBITDA for fiscal years 2028 and 2029. This valuation is a key factor behind the brokerage's cautious stance.
Strategic Pivot and Growth Outlook
Nazara Technologies is currently undergoing a significant business pivot under its new leadership. The company is actively working to scale its core gaming segments while seeking to divest non-core operations, such as its Ad-tech and Nodwin units. To support this growth, Nazara is integrating recent acquisitions, including Butterscotch Shenanigans and Paper Boat Apps. Despite the near-term valuation concerns, the brokerage maintains a positive view on the company's long-term expansion, projecting a compound annual growth rate (CAGR) of 38% for sales and 44% for EBITDA through the 2026-2029 period.
For investors, the primary monitorables remain the execution of this restructuring plan and the integration of acquired businesses. The company's ability to maintain its margin targets while shifting focus toward core gaming will be critical. Upcoming quarterly results will be closely watched to see if the margin adjustments across key units like Kiddopia, SportsKeeda, and DataWrkz align with these growth projections.