Analysts Adjust Estimates Post Nodwin De-consolidation
Prabhudas Lilladher has revised its Earnings Per Share (EPS) estimates downwards by 11% and 8% for fiscal years 2027 and 2028, respectively. These adjustments stem from updated depreciation assumptions following the de-consolidation of Nazara Technologies' subsidiary, Nodwin. Despite these cuts, the firm noted that Nazara's operational performance outpaced their projections, with an Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin reaching 16.7%, surpassing the estimated 15.4%. This stronger margin was primarily driven by robust contributions from the console publishing and offline segments, including Smaaash and Funky Monkey.
Nodwin Shows Turnaround, Strategic Shift Emphasized
The research report highlighted a sharp turnaround in Nodwin's performance, with revenues multiplying by 1.6 times and achieving an EBITDA margin of 15.3%. Profitability saw improvements across several of Nodwin's intellectual properties. The decision to de-consolidate Nodwin and re-emphasize the core gaming portfolio signals a strategic shift within Nazara Technologies, prioritizing profitability over sheer scale. This move aims to streamline operations and bolster financial health.
Outlook and Target Reaffirmed
Looking ahead, Prabhudas Lilladher projects a sales Compound Annual Growth Rate (CAGR) of 11% over the next three years. Expected EBITDA margins are set at 12.6% for FY26E, 15.6% for FY27E, and 16.8% for FY28E. Based on a Sum-of-the-Parts (SoTP) valuation, the brokerage retains its 'HOLD' recommendation for Nazara Technologies, maintaining a target price of Rs 276.