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India’s new Online Gaming Act has thrown the gaming industry off balance. Real-money gaming platforms have been hit hardest, and several listed companies have seen their stocks tumble in response. Among them was Nazara Technologies, which saw its stock fall nearly 20% from its 52-week high.

(Share Price)

This is strange, because Nazara's core business does not rely on real-money gaming at all and the company only has indirect links to it. Last year it invested ₹832 crore for a 47.7% stake in Moonshine Tech, the parent company of Pokerbaazi. With the new bill halting such platforms, the market fears Nazara may have to write off the entire investment.

Beyond that, the company's revenue streams remain globally diversified, shielding it from deeper structural risks. Nazara is also rewarding shareholders with 1:1 stock split and bonus shares, leaving investors wondering whether it can survive the current upheaval, and what the new law means for its future.

Let’s dive in.

Nazara is a global gaming company with a presence in key markets. The United States contributes the largest share of revenue, accounting for 62% in Q1FY26, followed by India (8%), the UK (6%), and the rest of the world (24%). This diversification gives Nazara scale and protects it from domestic risks.

The company has built a broad portfolio of games that spans genres, age groups and formats. Its business segments include esports (Nodwin, SportsKeeda), adtech (Datawrkz), freemium (Fusebox, World Cricket Championship), offline (Smaaash, Funky Monkeys), and PC/console publishing (Curve Games). Its only link to real-money gaming is PokerBaazi.

This diversity reduces its dependence on any single revenue stream, making the business more resilient to shifting market trends. Nazara's growth strategy leans heavily on acquisitions. It picks up high-potential gaming businesses worldwide and works to grow them further. This unlocks operating leverage, improves efficiency, and deepens user engagement across businesses.

For Nazara, esports has been a primary focus through its subsidiaries Nodwin Gaming and Sportskeeda. Nodwin organises tournaments, manages gaming events, and partners with global players, making it a key pillar of Nazara’s esports strategy.

In Q1FY26, Nodwin's revenue increased 49% year-on-year to ₹106 crore, driven by esports events featuring popular IPs such as PUBG and Valorant. However, its Ebitda loss widened from ₹1.5 crore (Q1FY25) to ₹11 crore in Q1FY26 as it continued to invest in growth.

Nodwin aims to be among the top two in youth entertainment globally in three to five years, from its current fifth spot. Its strategy focuses on global expansion and building a strong intellectual-property-led portfolio in entertainment, with esports at the core.

To this end, Nodwin is working on creating multi-decade IPs such as All That Matters (15 years), NH7 (14 years), and BGMS (in its fifth year). This helps reduce dependence on platforms or individual games. Nodwin has also partnered with the Esports World Cup Foundation to manage media rights sales and distribution across South Asia.

It is also expanding existing IPs, including Playground and Comic Con, which are scaling from 8 to 11 locations and going global, while strengthening the BGMI series. That said, expansion involves experiments and acquisitions, and some of these may not succeed.

Nodwin plans to raise fresh capital from some of its existing shareholders to fund its next phase of growth. Nazara has chosen not to participate in this round, which will dilute its stake below 50% and reclassify Nodwin as an associate company.

This will free up capital for Nazara's core gaming business while still allowing it to benefit from Nodwin's growing valuation. Nodwin was last valued at ₹3,460 crore in December 2024, and the upcoming fundraise is expected at a higher valuation.

Sportskeeda operates in the digital media space, covering a range of sports including cricket, football, wrestling, and gaming. However, it has been hit by a decline in organic traffic in the US following Google's algorithm update. As a result, its average monthly users declined to 61 million from 75 million in Q3FY25.

This decline resulted in a 21.3% drop in revenue to ₹48 crore, while Ebitda fell 73% to ₹5.4 crore. The company has made efforts to mitigate the impact, achieving 18% cost savings in Q1FY26 and targeting 45% in Q2FY26.

Based on these efforts and prior experience, Nazara expects traffic to return to Sportskeeda in the upcoming quarters. Its other properties, including Sports Central, Deltia's Gaming, and Pro Football Network (which broke even for the first time in Q1), have reported strong growth, albeit from a low base.

Nazara's adtech division Datawrkz reported explosive growth in Q1FY26. Revenue jumped 313% year-on-year to ₹106 crore, led by the consolidation of Space & Time. Ebitda rose 271% to ₹2.6 crore from ₹70 lakh in the same quarter last year.

The consolidation is aimed at creating synergies in client relationships, expanding cross-market offerings, and opening access to new industry segments. Nazara also plans to use the geographic footprint of Space & Time to grow Datawrkz's solutions in the UK market. At the same time, Datawrkz is moving towards higher-margin product lines within its independent adtech operations.

Within gamified early learning for children, Nazara operates Kiddopia and Animal Jam. While Kiddopia ranks among the top-grossing apps in the US, it has faced subdued growth over the past few quarters due to higher churn and declining subscribers.

As a result, revenue fell 7.3% to ₹45.4 crore in Q1FY26, while Ebitda fell 19% to ₹8.5 crore. Subscribers declined from 246,943 in Q1FY25 to 227,170 in Q1FY26, though the pace of decline has slowed. Average churn, which had increased to 6.9% in Q4FY25, dropped to 5.2% in Q1FY26. Meanwhile, average revenue per user rose from $6.9 to $7.2 in Q1FY26, aided by price hikes.

Kiddopia is on the verge of a recovery, with growth expected to pick up in the next couple of quarters. Kiddopia's recovery is expected to be driven by its IP-led content strategy. In Q1FY26 it launched new offerings, including Barbie game island (Mattel), Baby John Playroom game (Moonbug's Little Angel), and PJ Masks-themed learning activities (Hasbro).

It has also partnered with Animaj (Pocoyo) and VOOKS to expand early literacy content, while continuing to release original content, such as Happy Wheels updates and the new Captain Kidd island.

Animal Jam's revenue rose 12% to ₹26.4 crore, driven by premium content, community engagement, in-app purchases, and social media contests. Ebitda also rose 55% to ₹5.9 crore.

To push growth, Nazara plans to launch a casual mobile game inspired by nostalgic play for all age groups in FY26. With this, Animal Jam is positioned as one of the primary growth drivers for the topline in FY26.

The freemium segment saw sharp revenue growth of 1,310.8% year-on-year to ₹91.7 crore, from just ₹6.5 crore. Ebitda also turned positive at ₹16 crore, against a loss of ₹3 crore. This was led by the acquisition of Fusebox, an interactive storytelling platform best known for its narrative games such as Love Island.

Fusebox revenue rose 49% to ₹73 crore, driven by the global launch ofBig Brother and the latestLove Island season. However, Ebitda dipped 13% to ₹10.4 crore, reflecting higher investments. Under Nazara, Fusebox has expanded from a single-game studio to a multi-game company.

It plans to launch a new game based on Big Boss and another on a major international IP, already under contract. These investments are expected to yield returns from Q2FY26 onwards.

Nazara has also ventured into PC games with the acquisition of Curve Games, an independent publisher focused on platforms such as PlayStation, Xbox, and Nintendo Switch. The company generated revenue of ₹54.6 crore and Ebitda of ₹20.7 crore in Q1FY26. Several new titles are under development and expected to contribute to growth. Comparable numbers have not been disclosed.

Beyond this, Nazara has acquired Smaaash from NCLT in early FY26, marking its entry into offline gaming and entertainment. Funky Monkey is another offline game targeted at the children’s outdoor play market.

On a consolidated level, Nazara's Q1FY26 revenue rose 99% to ₹499 crore, while Ebitda rose 90% to ₹47 crore. Profit after tax jumped 118% to ₹51 crore. Moonshine contributed nothing to revenue or Ebitda as an associate, while PAT contribution was negative.

Nazara's annual revenue has grown 3.6-fold from ₹454 crore in FY21 to ₹1,624 crore in FY25. Ebitda has grown 3.4-fold to ₹153 crore, and PAT 3.6-fold to ₹51 crore. Nazara aims to double its Ebitda to ₹300 crore by FY27 and believes it is on track to achieve or surpass that goal.

Writing off Moonshine would not derail this, but it would result in a sharp one-time hit to PAT. However, the company holds reserves of ₹2,828 crore, giving it the financial bandwidth to absorb this loss. To soften the blow, it is looking to acquire a company in the high valuation range.

Nazara's stock was among the strongest during the market correction over the past year. During this time it traded at a four-year high of around ₹1,453, at an EV/Ebitda multiple of 63. After a recent 20% fall to ₹1,133, this metric has eased to 40, about a 10% premium to the four-year median of 36. The stock remains richly valued, but Nazara's acquisition-led model can sustain such valuations.

However, risks remain. A key one is a ₹1,120-crore GST demand owing to its past exposure to real-money gaming. The demand is on hold, and industry-wide hearings in the Supreme Court have concluded. Any adverse ruling would deliver a massive blow to Nazara's balance sheet.

That said, in the long run, Nazara remains fairly diversified and one of only listed companies serving the booming gaming industry in India and worldwide. But in the short term, investors must weigh the risks against Moonshine and GST liabilities.

For more such analysis, read Profit Pulse.

Madhvendra has more than seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.

The writer does not hold the stocks discussed in this article.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.

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