Rakesh Jhunjhunwala held Nazara Technologies trading at sky-high price multiples!

Do fundamentals support the growth factored in stock price?

Nazara Technologies has been a buzzing stock ever since its IPO has hit the market, mostly because marquee investor Rakesh Jhunjhunwala has a decent shareholding of 10.82 per cent in the company. The stock was listed on April 1, 2021, which opened at Rs 1670.7. The stock traded in a range-bound manner for five months until it picked its pace in mid-September. The stock hit a fresh 52-week high of Rs 3354.40 in early October. Since its IPO, it has delivered a stellar return of over 62 per cent. 

Nazara Technologies is the first Indian gaming company to be listed on exchanges. It is a leading diversified gaming and sports media platform. It came in at a time where India is having a boom in the gaming industry. The way e-sports has picked up in the covid-led lockdown times has completely reformed the perspective regarding the mobile gaming industry. The company has been actively acquiring gaming companies to strengthen its business. The financial position is healthy, it has minimal debt in the books and the operating cash flows indicate great liquidity advantage. 

However, the big question is 'valuation.' 

The stock is trading at a crazy P/E multiple of 938. It might not be the best time for fresh buying. Let us know your opinion on the stock.