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On a path of profit-led growth

We increase our FY27E EPS estimate by 34% as we factor in the consolidation impact arising from acquisition of Blue Tile (BT) Games for a period of 12 months versus earlier expectation of 9 months. NAZARA IN’s operational performance was better than our estimate with EBITDA margin of 19.5% (PLe 17.2%) led by Curve Digital and Fusebox. Further, PAT was aided by one-time revaluation gain of Rs310mn in Rusk Media. We believe acquisition of BT Games can be a game changer for NAZARA IN as it lends material scale advantage without compromising on margins (BT games reported an EBITDA margin of 18.1% in CY25). Further, performance linked earn-out structure of the transaction brings in accountability and minimizes upfront capital drain. Led by acquisition of BT Games, we expect revenue CAGR of 47% over FY26-FY28E with EBITDA margin of 16.2%/16.8% in FY27E/FY28E respectively. We maintain BUY on the stock with SoTP based TP of Rs319.

Revenue decreased 23.5% YoY:

Revenue decreased 23.5% YoY to Rs3,978mn (PLe Rs3,921mn) due to de-consolidation of Nodwin. E-sports revenue declined 85.3% YoY to Rs319mn (PLe Rs296mn). Ad-Tech revenue was down 39.7% YoY to Rs892mn (PLe Rs1,151mn) while gaming revenue increased by 78.0% YoY to Rs2,785mn (PLe Rs2,537mn). Gaming/Esports /Ad-Tech segment reported EBIT of Rs387mn/Rs19mn/Rs11mn respectively.

EBITDA margin at 19.5%:

EBITDA increased 52.1% YoY to Rs776mn (PLe Rs676mn) with a margin of 19.5% (PLe of 17.2%) as compared to an EBITDA margin of 9.8% in 4QFY25. Beat at the EBITDA level was driven by lower content & web server cost, which stood at Rs648mn (PLe Rs819mn). PAT after MI increased 196.1% YoY to Rs470mn. After adjusting for impairment, PAT increased by 56.4% YoY to Rs505mn with a margin of 12.7% as compared to an adjusted PAT margin of 6.2% in 4QFY25. Beat at the bottom line was on account of lower-than-expected depreciation of Rs455mn (PLe Rs588mn) and higher other income, which came in at Rs507mn (PLe Rs263mn)

Con-call highlights:

1) NAZARA IN reported other income of Rs507mn (up 171% YoY) in 4QFY26, largely driven by a Rs310mn fair value gain on its investment in Rusk Media, along with some currency gains.

2) Share of losses from associates stood at Rs305mn in 4QFY26. This was primarily driven by a goodwill write down of Rs500mn, relating to an earlier OML asset acquisition by Nodwin.

3) As for SportsKeeda, focus remains on cost optimization with margins expected to improve in FY27E.

4) Curve Games plans to launch at least 6 new titles in FY27E.

5) NODWIN is targeting an independent fundraise of US$100-200mn through a mix of primary and secondary issuance while simultaneously preparing for an IPO.

6) Depreciation and amortization expense declined 23.8% on QoQ basis to Rs455mn in 4QFY26. This was due to Nodwin’s deconsolidation, and long amortization cycle of Curve Games' multi-year game development investments.

7) Consolidation of BT Games is expected from 1QFY27E.

8) Seasonality in Fusebox is expected to moderate gradually as the portfolio expands to multiple IPs and more frequent release cycles, including 3 seasons each of Love Island and Big Brother in FY27E along with the launch of Traitors.

9) Kiddopia returned to subscriber growth in 3QFY26 and sustained momentum in 4QFY26, supported by its CoE, stronger IP integrations, better data visibility and enhanced decision-making capabilities.

10) WildWorks will integrate Mattel’s Monster High IP into Animal Jam and launch Animal Jam on Roblox in FY27E, alongside releasing a new hyper-casual game targeting kids and women in North America (in 2QFY27E).

11) Human Fall Flat crossed 58mn lifetime units sold globally.

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