Nazara Technologies STUNS with ₹885 Cr Profit: One-Time Gain Masks Big Regulatory Loss! What Investors MUST Know!

Tech

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Updated on 12 Nov 2025, 04:38 pm

Nazara Technologies Ltd. announced a phenomenal net profit of ₹885 crore for the September quarter (Q2 FY26), a stark contrast to the ₹16 crore reported in the same period last year. The primary driver for this extraordinary profit increase was a one-time gain of ₹1,098 crore from the fair-value remeasurement of its investment in Nodwin Gaming, following its reclassification as an associate after the stake fell below 50%.

The company's operational performance also showed strength, with revenue from operations surging 65% year-on-year to ₹526.5 crore, propelled by robust growth in its gaming and e-sports segments. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) more than doubled to ₹60 crore from ₹25 crore, and operating margins improved to 11.4% from 8%.

Despite the record profit, Nazara faced significant headwinds. The recently introduced Gaming Regulation Act, 2025, which prohibits online real-money games, led the company to fully impair its ₹915 crore investment in Moonshine Technologies (PokerBaazi) due to the cessation of its business operations.

In a strategic move to broaden its sports ecosystem presence, Nazara's subsidiary Absolute Sports Pvt. Ltd. (operating Sportskeeda) acquired a franchise in the inaugural Indian Pickleball League.

Impact: This news presents a mixed picture for investors. The headline profit figure is highly impressive but is heavily influenced by an accounting gain. The impairment of the PokerBaazi investment highlights the significant regulatory risks facing the online real-money gaming sector in India. The expansion into pickleball indicates a diversification strategy but will take time to yield returns. The stock's minimal movement suggests the market is weighing the one-time gain against the regulatory impact. Rating: 6/10

Difficult Terms: - De-subsidiarisation: A change in accounting classification where a subsidiary is no longer controlled by the parent company, impacting its reporting. - Associate: An investment where the investor has significant influence but not control, typically held between 20-50% of voting power. - Ind AS 110: Indian Accounting Standard for Consolidated Financial Statements, guiding how investments and control are reported. - EBITDA: A measure of operating profitability before accounting for interest, taxes, depreciation, and amortization. - Impairment: A charge taken when an asset's value drops significantly below its book value on the balance sheet. - Operating Margins: The percentage of revenue remaining after deducting direct costs of producing goods or services.