Nazara Technologies STUNNED: Massive Q2 Loss & INR 1000 Cr Tax Shockwave!

Tech

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Updated on 12 Nov 2025, 02:59 pm

Nazara Technologies has reported a net loss of INR 33.9 crore for the second quarter of FY26, a significant downturn from a net profit of INR 16.2 crore in the corresponding quarter of the previous fiscal year. This loss was primarily attributed to a substantial impairment charge of INR 914.7 crore recognized against its investment in PokerBaazi, a portfolio company affected by the ban on real-money gaming. The investment's value has been reduced to INR 96.5 crore, leading to a standalone net loss of INR 966.95 crore for the quarter.

Despite these exceptional charges, Nazara's operating revenue demonstrated robust growth, jumping 65% year-on-year and 6% quarter-on-quarter to INR 526.5 crore. Total income for the quarter stood at INR 1,630.9 crore, significantly bolstered by INR 1,104.5 crore in 'other income'. This substantial other income was a result of Nazara reclassifying Nodwin Gaming from a subsidiary to an associate entity, allowing the company to mark its investment to fair value after losing control.

Total expenses for the quarter surged by 66% year-on-year to INR 534.3 crore. Adding to the regulatory pressures, Nazara and its group entities, Halaplay and OpenPlay, have been served GST show-cause notices totaling over INR 1,000 crore. These notices relate to the government's implementation of a 28% GST on the full value of player deposits, a move affecting the entire online gaming industry. The company has indicated that it is challenging these notices.

Impact This news significantly impacts Nazara Technologies' financial standing and investor confidence due to the large net loss, substantial impairment charge, and significant potential GST liabilities. It also underscores the ongoing regulatory uncertainty and financial risks within the Indian online gaming sector. Impact Rating: 8/10

Definitions: * **Net Loss**: Occurs when a company's total expenses exceed its total revenues over a specific financial period. * **Real-money gaming**: Online games where players can wager money and potentially win real cash prizes. * **Portfolio company**: A company in which another entity has made an investment. * **Impairment loss**: A reduction in the book value of an asset when its recoverable amount falls below its carrying amount on the balance sheet. * **Standalone net worth**: The net worth of a company calculated solely on its own financial statements, excluding consolidated subsidiaries. * **Operating revenue**: Income generated from a company's primary business activities. * **Other income**: Income received from sources other than the company's core operations, such as investment gains or interest. * **Reclassifying**: Changing the accounting treatment or classification of an entity or asset within financial statements. * **Associate entity**: A business over which an investor has significant influence, typically holding between 20% and 50% of the voting stock, but not control. * **Subsidiary**: A company that is owned or controlled by another company, known as the parent company. * **Fair value**: The estimated price that an asset would fetch or liability would be settled for in the current market. * **GST show-cause notices**: Formal notices issued by tax authorities demanding an explanation from a taxpayer regarding a proposed tax liability or penalty.