Nazara Technologies shares were in focus on Monday after the mobile gaming company said it would acquire a 100 percent stake in the skill gaming company OpenPlay Technologies.

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Nazara Tech shares jumped as much as 5.51 percent to Rs 1,805.30 on the BSE in morning deals. At 10:00 am, the Nazara stock traded with a gain of 3.80 percent at Rs 1,776, outperforming the benchmark Sensex index, which was up 0.85 percent and near an all-time high touched earlier in the day.

Also read: Nazara Tech expects margin to normalise in coming quarters

In a regulatory filing after market hours on Friday, Nazara tech said it would buy the stake in Hyderabad-based OpenPlay for Rs 186.41 crore in one or more tranches from Sreeram Reddy Vanga and Unnati Management Consultants.

In the first tranche of the strategic investment, Nazara said it would acquire 23.30 per cent of the issued and paid-up share capital of OpenPlay for a consideration of Rs 43.43 crore by end of Q2 of the current financial year. The remaining tranches will be completed during the financial year 2021-22.

Also read: E-sports space set to grow; Nazara Tech to benefit from media rights, licencing, says CEO

OpenPlay offers a strong tech and product platform for the company to build a network of skill gaming destinations operating on one common platform under the proven leadership of the open play team, Nazara Technologies said.

Last week, brokerage Jefferies initiated coverage on Nazara Technologies with a 'buy' rating for a target price of Rs 2,070.

"Nazara offers a direct way to play the gaming ecosystem as it is building a network of gaming companies via M&A that benefit from each other. Its presence in the rapidly-growing gamified early learning market in the US, mobile gaming and eSports market in India could drive a 28 percent/46 percent CAGR in revenues/EBITDA in FY21-26E, by our estimates," Jefferies said on Wednesday.

The brokerage said it values Nazara's early learning business and Nodwin at 10 times its FY26 EV/sales, web portal (SportsKeeda) at 12 times EV/sales given higher growth and margins, freemium and real money gaming at five times EV/sales, and core business at three times EV/EBITDA.

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