Nazara Technologies shares rise 10% despite CLSA's 35% downside projection

Shares of Nazara Technologies gained as much as 10% on Wednesday, reaching a high of ₹280.95 per share. The rally coincides with news regarding the Centre's new online gaming law, which will bar all online money games from October 1 2025, while maintaining support for e-sports and other online games. The stock recently began trading adjusted for its bonus and stock split. Meanwhile, CLSA is bearish on the stock. Nazara's valuations are expensive at 48 times estimated price-to-earnings for financial year 2027, the global brokerage said. 

It reiterated its "underperform" rating on Nazara Technologies, stating a price target of ₹166 per share, which represents a possible 35% downside from the previous close. CLSA highlighted that fantasy sports, rummy, and poker gaming companies were already under the 28% GST slab. The new regulation is expected to have a direct impact on Nazara’s 46% stake in PokerBaazi, which was acquired for ₹800 crore in January 2025.

In August, Moonshine Technologies Pvt. Ltd. (PokerBaazi), an associate company of Nazara, ceased its real money online gaming operations, describing the move as a "matter of abundant caution and in due respect of the Centre's mandate."

In the June quarter, Nodwin, Nazara's e-sports subsidiary, contributed 70% of the company’s e-sports revenue, representing a 17% increase over the previous year.

CLSA noted that Nazara's ownership in Nodwin has now declined below 50%, which may affect revenue consolidation and overall growth. The implications of the regulatory changes are significant for Nazara Tech’s exposure to real money gaming, particularly in view of the recent investment in PokerBaazi and the evolving compliance landscape.