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Platform Scale and Cleaner Earnings Support Upside; Retain BUY

NAZARA is increasingly transitioning into a globally diversified, gaming-first platform with improving earnings quality, strong cash conversion and rising operating leverage. Following portfolio rationalisation over the last two quarters, the business now operates on a structurally cleaner and higher-margin base, with gaming accounting for ~90% of FY26 EBITDA. Looking ahead, incremental scale from Bluetile & BestPlay, continued execution of the Centre of Excellence (COE)-led operating playbook and deeper monetisation across owned IPs are expected to improve earnings visibility and support durable margin expansion. We value NAZARA on a SOTP basis (Table below) arriving at a TP of INR 400 and retain our BUY rating. We believe current valuation do not fully capture the platform’s improving profitability profile and longterm compounding potential.

Steady Operational Performance; EBITDA Expansion Encouraging

* Revenue for Q4FY26 came in at INR 3,978 Mn, down 2.0% QoQ and down 23.5% YoY (vs CIE est. INR 4,423Mn). Adjusting for Nodwin, revenue grew by 8% YoY

* EBITDA for Q4FY26 came in at INR 776 Mn, up 14.6% QoQ and 52.1% YoY (vs CIE est at INR 796 Mn). EBITDAM came in at 19.5% for Q4FY26, up 282 bps QoQ and 970 bps YoY (vs CIE est. at 18.0%)

* PAT for Q4FY26 stood at INR 470Mn, up 376.3% QoQ and 196.1% YoY (vs CIE est. at INR 312 Mn).

Core Gaming Momentum Intact; FY27 Growth Visibility Improves

NAZARA reported Q4FY26 revenue of INR 3,978 Mn (-2.0% QoQ / -23.5% YoY) largely due to Nodwin de-subsidiarisation and softness in Adtech Business; adjusted for Nodwin, revenue grew 8% YoY. Growth was supported by improving execution across Kiddopia, Animal Jam, PC/Console publishing and continued scaling up of Fusebox’s narrative gaming engine. Kiddopia sustained subscriber growth for the 2nd consecutive quarter alongside improving LTV/CAC economics, while Animal Jam delivered healthy margin expansion supported by stronger LiveOps and disciplined user acquisition. Looking ahead, the proposed Bluetile and BestPlay acquisition (Nazara’s largest M&A to date) materially strengthens FY27 growth visibility, adding a scaled up casual gaming portfolio, AI-native development capabilities and ~22 Mn MAUs. Combined with improving profitability across core gaming IPs, scaling up narrative franchises at Fusebox and Smaaash 2.0 rollout, we see scope for sustained revenue acceleration in FY27& FY28E.

Operating Leverage and COE Execution Drive Margin Inflection

NAZARA reported an all-time high EBITDA with EBITDAM, expanding to 19.5%, up 970 bps, reflecting benefits of the company’s sharpened focus on high-margin gaming businesses and increasing operating leverage across the platform. The business is increasingly converging towards a globally diversified gaming model spanning mobile, PC & console and offline gaming, with gaming contributing ~90% of FY26 EBITDA versus 56% a year ago. Further, FY26 also marks an important transition in operating structure with Centres of Excellence across User Acquisition, Data Analytics, AI, Growth and Product increasingly embedded across the gaming lifecycle. These capabilities are driving improving monetisation, lower acquisition cost and stronger player retention across portfolio companies.

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