264% profit in 3 years! Rakesh Jhunjhunwala makes a killing with Nazara Technologies

Ace investor Rakesh Jhunjhunwala has made a killing with Nazara Technologies after its shares listed on the stock exchanges with a premium of 81 per cent over its issue price.

The stock debuted at Rs 1,990 on NSE, a 80.74 per cent premium over the issue price of Rs 1,101. On the BSE, the scrip got listed at Rs 1,971, a 79 per cent premium to its issue price.

Rakesh Jhunjhunwala owns 10.82 per cent in Nazara Tech. He invested Rs 180 crore in Nazara in 2018, the value of which has risen to Rs 656 crore as per the listing price today. This translates into gains of 264.44 per cent in just three years.

After a bumper opening, investors booked profits in the gaming and sports media platform as its stock was trading around Rs 1,580, up 43 per cent in afternoon trade.

Ajit Mishra, VP Research, Religare Broking advise existing investors to book partial profits, while interested investors who could not get the IPO allotment should wait for a lower entry point.

"Existing investors may consider booking partial profits and hold the rest with a long-term horizon. We feel investors would get an opportunity to enter at lower levels, so avoid making any fresh investment," says Mishra.

Nirali Shah, Head Equity Research, Samco Securities agrees. "While a bumper listing seems lucrative to investors, they should refrain from entering Nazara at the current levels mainly because of its erratic cashflows and a declining trend in profits. Until there is sufficient stability in its financials, this stock could be a risky bet. With the gaming culture taking a lot of form in the recent generation, the opportunities for this player are huge but it remains to be seen if their capital allocation and operations efficiently translate to their bottomline. Hence, investors should continue to observe its numbers for a few more quarters and then only take an informed investing decision," she says.  

The Rs 583-crore Nazara IPO had hit the primary market on March 17 till March 19. It was oversubscribed 175.46 times.

"As we take our first step as a listed company today, we are fully aware of the increased scrutiny and the expectation burden which comes along on account of being the first gaming company to be listed in Indian stock exchange. We have always tried to keep things simple instead of getting overwhelmed with external feedback and scrutiny and we wish to follow the same by keeping our head down and focus on delivering profitable business growth," says Manish Agarwal, CEO and co-founder, Nazara Technologies, in a LinkedIn post today.

Also read: Jhunjhunwala-backed Nazara Technologies makes strong opening, lists at 79% premium on BSE