Gaming company Nazara Technologies which is expecting to receive a valuation of Rs 3000 crore-3500 crores, has pulled in a sizeable Rs 540 crores in the last few weeks itself. Of this amount a third, Rs 180 crores have been invested by Rakesh Jhunjhunwala, the ace investor with a reputation to pick the best companies to invest in.
The investment by Jhunjhunwala in Nazara is also significant from the perspective that he had stayed away from new generation technology based ventures. However, he has justified his picking up Nazara, by saying “Nazara has a consistent track record of delivering profits, cash flows, along with efficient use of capital and high RoE. I see growth potential in the company”.
Indeed, the company has posted a robust Rs 550 crores in gross billings and an impressive Rs 66 crores profit after tax. You can hardly see such figures for most other companies in the tech space. The gestation in those cases is much longer.
Jhunjhunwala admits as much, saying he sees long term potential for the gaming segment in general and Nazara Technologies in particular and also its ability to sustain these levels of profitability. The few other ventures the successful investor has bet his money on, include Hungama and Remedinet Technologies. In fact, he has created a separate venture capital fund Exfinity, to focus on investments he may make in software startups. While Hungama is an aggregator and publisher of entertainment content, Remedinet deals with cashless bills and payments processing in hospitals.
Now getting back to Nazara, the other big-ticket funding it received recently was Rs 330 crores from IIFL Special Opportunities Fund. In terms of its future business prospects, the recent report on the gaming industry by FICCI-KPMG says the business could expand from $200 million in 2016 to over $3 billion by 2019 and Nazara should definitely be able to bite a large chunk of this since it has already expanded its footprints beyond India to some 74 countries.
Nazara Technologies is also planning its maiden public issue sometimes in the middle of next year. This interest shown by Rakesh Jhunjhunwala should also augur well for the company.