Gaming Stocks in India
There was once a time when playing games was considered to be bad. Our parents would force us to keep our gaming consoles down and go outside to play. But all this changed during the pandemic. Everyone had no option but to stay at home. And what is the best way to pass time during such times?
In this article:
The Gaming Sector in India
3 Key Drivers of the Gaming Sector in India
List of Gaming Stocks in 2022
#1: Nazara Technologies Ltd
#2: Zensar Technologies Ltd.
#3: Delta Corp Ltd.
#4: OnMobile Global Ltd.
Games, of course!
The pandemic has been a blessing in disguise for the gaming industry in India. During the pandemic, the downloads of popular video games like PUBG, Fortnite, Ludo King, and Dream 11 etc. went through the roof.
I’m sure you must have spent hours playing these games during the pandemic. And by doing so, you have contributed to the growth of gaming stocks in India. Nazara Technologies Ltd, Zensar Technologies Ltd, and Delta Corp Ltd. etc. are some of the leading gaming stocks in India. These gaming stocks have generated stellar returns in the pandemic.
Let us take the example of Nazara Technologies Ltd. It is the biggest and most popular gaming stock in India. Its total sales before the pandemic (2019), were Rs 170 crore. In 2020, its sales jumped to Rs 248 crore. And then came the golden year. In 2021, the company’s sales skyrocketed to Rs 454 crore. This was a growth of nearly 83% between 2020 and 2021.
Now we all know that great sales means growth in share prices. This is exactly what happened to this gaming stock. Nazara Technologies Ltd. listed for trading on March 30, 2021. It went on to hit a high of Rs 3,122 on October 08, 2021. This signifies a growth of 86.90% on its listing price of Rs 1,670.
And Nazara Technologies Ltd. is not the only gaming stock to witness such high growth. Zensar Technologies Ltd is another gaming stock which shined like a diamond during the pandemic. In March 2020, its share price was Rs 87. This skyrocketed to Rs 547 in September 2021. So, its share price grew by nearly 528% in 18 months.
All of these numbers clearly indicates to the grand future of the gaming sector in India. And the best way to participate in this growth is to invest in gaming stocks. And play games, of course! But which gaming stocks should you invest in? Which gaming stocks in India are in the best position to capitalise on the growing demand for games? We will answer all these questions in this article today. But before we move ahead, let us take a look at the gaming sector in India.
The Gaming Sector in India
The gaming sector in India is one of the fastest growing sectors of our economy. It witnessed a growth of 40% in 2019-20. And that’s not all. In 2020-21, the size of the gaming sector in India was valued at $ 930 Million. This is expected to boom to $ 4.01 Billion by 2025. So, the Indian gaming industry is set to grow at a rate of 14.01% between 2020 and 2025. This is leaps and bounds ahead of our position in 2007. The graph below shows the growth of the gaming sector in India since 2007.
We have come a long way since 2007, when our gaming industry was valued at Rs 4 billion. And look at us now. In 2022, the size of the gaming industry in India is expected to be Rs 143 billion! And we are giving tough competition to other developed countries. In fact would you believe it that our gaming sector has grown at a better pace than USA and China? Well, believe it!
Between 2017 and 2020, our gaming sector grew at a CAGR of 38%. In contrast, the gaming sector in the USA grew by a CAGR of 10%. The growth in the gaming sector in China was the worst at a CAGR of 8%. So, we are way ahead of the competition. And the best part is that our gaming sector is still in the nascent stages. The gaming sector in India as a percentage of the global gaming market is only 1%. Add to this, our increasing smartphone penetration and the growth in our gaming population. We are, without a doubt, the best placed to capitalise on the global gaming craze.
Let us now look at the key drivers of the gaming sector in India.
3 Key Drivers of the Gaming Sector in India
- Easy Access to Smartphones: India has one of the cheapest smartphone markets in the entire world. A normal smartphone would cost you roughly 244 dollars or Rs 18,372 in 2010. This reduced to 196 dollars or Rs 14,757 in 2021. Nowadays you can even get smartphones with lots of storage and RAM in less than Rs 5,000.
Did you know that India’s smartphone shipments increased by 23% and reached over 38 million devices in 2021! This cheap access to smartphone has given the much desired push to the gaming sector in India. In fact, India has the best smartphone penetration rate of 37%. Currently, India has more than 560 million internet users. Off these, 85% are mobile users, 11% used PCs and 4% use tablets.
- Cheap Data: The entry of Reliance Jio changed the face of the Telecom sector in our country. Reliance Jio offered cheap data compared to market veterans like Airtel, Vodafone etc. Now before you complain about the rising data costs, take a look at the below graph. In Canada, the cost per 1 GB data is $12.55. In comparison, the average cost per 1 GB data in India is only $0.09. Here’s a fun fact – India has the lowest data tariffs in the entire world. Such low tariffs have driven data consumption and led to the rise of gaming sector in the country.
- The Pandemic: Yes, the pandemic has played a crucial role in the growth of the gaming sector in India. As per a report by India Invest, 45% of India’s mobile users started playing games on their smartphones during the pandemic. The growth of gaming influencers like Ajey Nagar (also known as Carryminati), Two-Side Gamers, and Naman Mathur etc. have also helped in the growth of the gaming sector. As per a report by KPMG, the number of gamers in India has increased from 250 million in 2018 to 400 million in 2020.
- The Metaverse Connection: The growth of metaverse depends massively on the gaming industry. What is metaverse? Well, think of it as a 3D virtual place where you can interact with the avatar of the other person from the comfort of your home. You can visit the Grand Canyon with your friends while sitting in your bedroom. But it won’t be a superficial experience. Oh no.
With the metaverse technology, you will be able to feel the wind, the chill, the heat and everything virtually. And imagine, how will companies ensure that people spend a majority of their time in the metaverse? By building games! Yes, people spend hours on end playing PUBG and Fortnite. The simple truth is that games are addictive. And by building immersive, addictive games, the metaverse universe will thrive. Mark Zuckerberg’s Facebook is spending billions of dollars on developing the metaverse. And they are investing heavily in the gaming segment.
By now you must have realised that gaming is going to be a major theme in the coming years. And you don’t need an expert to tell you this. Simply count the number of advertisements for games around you. The entire cricket team endorses MPL and Dream 11. YouTube and Instagram influencers are giving away free coupons for games like Winzo, PUBG, and Ludo King etc. Now, we won’t encourage you to play games the entire day. That wouldn’t be productive or profitable.
But there is a way to make money from these gaming apps. Instead of spending your money buying gaming subscriptions, its time you bought gaming stocks. Now, there are nearly 400 gaming companies in India. But very few of them are listed. So, unless you are an angel investor or a venture capitalist, most of these gaming stocks are out of your reach. But there are some gaming stocks which can help you capitalise on the gaming craze in the country. Which are the top gaming stocks in 2022? Let’s find out.
List of Gaming Stocks in 2022
Gaming Stocks in 2022 #1: Nazara Technologies Ltd
Nazara Technologies Ltd. is one of the most popular gaming stocks in India. Even ace investor, Rakesh Jhunjhunwala holds stake in this gaming stock. Nazara Technologies Ltd. is India’s leading gaming and sports media platform.
Its gaming business is divided into three segments –
- Gamified Early Learning – Nazara Technologies Ltd.’s Kiddopedia is an immersive, self-directed learning experience. It is targeted for children aged 2-7 years. This one segment contributes 39% of the company’s revenue.
- Esports – This is the fastest growing Indian esports and sports news segment. You must have heard of platforms like SportsKeeda and Nodwin Gaming. The main source of income for this segment is media rights, sponsorships and advertisement. Esports contributes to 37% of the company’s total revenue.
- Freemium – The objective of this segment is to attract gamers with free games. Some of the most popular games from Nazara Technologies Ltd. include World Cricket Championship, WCC2, Beach Cricket, and Carrom Clash etc. It drives 4% of the company’s revenue from in-app purchases and advertisements.
Nazara Technologies Ltd. is a market leader and is in the best position to capitalise on the growth of the gaming sector in India. Here are a few reasons why Nazara Technologies Ltd. is a gaming stock that deserves to be on your watchlist –
- It controls 80% of the domestic Indian esports market. It also controls 70% of the market share in the cricket simulation game.
- Nazara Technologies Ltd. is the fastest growing global entertainment company with leading IPs like Kiddopia, Paperboat etc.
- It has a highly attractive and large user base of 62.59 million.
- In the gaming industry, it’s all about the monthly average users (MAUs). The great news is that the MAU of Nazara Technologies Ltd. has grown by 56% on a y-o-y basis.
- The company is a dominant player in India. But it is also expanding its operations in developed markets like the USA, France, Germany, and Spain etc.
- Their total revenue has jumped from Rs 2,475 million in 2020 to Rs 4,542 million in 2021. It was a growth of 83.5% in revenues.
- The biggest revenue driver for Nazara Technologies Ltd. is their gamified early learning segment. Its yearly change has been 819% between 2020 and 2021.
- The stock is also almost debt-free. Its debt to equity ratio is 0.01.
- This gaming stock has great cash conversion ratio. It converts 126.42% of its operating earnings into operating cash flows.
Let us take a look at the key financials of Nazara Technologies Ltd as of March 05, 2022.
|Market Cap (Cr): 5,587||Face Value (₹): 4||EPS (₹): 8.7|
|Book Value (₹): 210||ROCE (%): 2.82||Debt to Equity: 0.01|
|Stock P/E: 207||ROE (%): 1.55||Dividend Yield (%): 0|
Gaming Stocks in 2022 #2: Zensar Technologies Ltd.
Zensar Technologies Ltd. is another gaming stock which must be on your watchlist for 2022. It has two main segments – application management services (AMS) and infrastructure management services (IMS). The AMS segment contributes to 84% of the total revenue and the IMS segment contributes the balance 16%. The overall business of Zensar Technologies Ltd is split into five core segments –
The best part is that the company’s revenue from the app business is increasing consistently in the last few years. Their revenue jumped 29% in March 2019 to Rs 3,347 crore, signifying a 29% growth.
Let us take a look at the key financials of Zensar Technologies Ltd as of March 05, 2022.
|Market Cap (Cr): 8,747||Face Value (₹): 2||EPS (₹): 16.60|
|Book Value (₹): 110||ROCE (%): 22.2||Debt to Equity: 0.13|
|Stock P/E: 23.3||ROE (%): 14.9||Dividend Yield (%): 0.93|
Gaming Stocks in 2022 #3: Delta Corp Ltd.
Delta Corp Ltd. is the largest listed gaming stock in India. This is the second gaming stock that Rakesh Jhunjhunwala owns. Traditionally, Delta Corp Ltd. owns casinos in India. But the pandemic forced them to go online. The great news is that Delta Corp Ltd used the pandemic to their advantage. They acquired India’s largest online poker site, Adda52.com. They also launched Faboom, a multi-player gaming platform that offers both fantasy and real-money gaming. It has also acquired a 100-acre land parcel near Mopa Airport. They plan on building a one-stop shopping destination consisting of an electronic casino, gaming zone, shopping malls etc.
Delta Corp Ltd.’s business is split into three main categories –
- Casino Gaming
- Online Gaming
In the casino gaming business, Delta Corp Ltd has six casinos in key geographies of Nepal, Goa, Sikkim and Daman.
But their casino gaming business was hit hard during the pandemic. They lost as much as 58.02% of their revenue from the casino gaming business. But remember, Delta Corp Ltd has a monopoly in the casino business. Apart from this they also enjoy huge moats since opening and running a successful casino business is not easy. But there is some relief. Their online gaming business has more or less consolidated for the loss in the casino gaming business.
In the online gaming business, Delta Corp Ltd. is claiming dominance with Adda52.com – Poker and Rummy. They have more than 1 million user base and are a leader in 13-card and 21-card rummy games. There is an increase of 13.09% in their revenue from the online gaming business between 2019-20 and 2020-21.
And their third business segment is the hospitality segment. They own the first and the only five-star hotel in Daman. They also own all-suite hotel in North Goa with an integrated casino. Their hospitality segment was hit the worst during the pandemic. They lost as much as 67.14% of their revenue between 2019-20 and 2020-21.
Here’s a look at the key financial ratios of Delta Corp Ltd. as on March 05, 2022.
|Market Cap (Cr): 8,906||Face Value (₹): 1||EPS (₹): 2.87|
|Book Value (₹): 71.20||ROCE (%): 0.28||Debt to Equity: 0|
|Stock P/E: 115||ROE (%): -1.09||Dividend Yield (%): 0.32|
Gaming Stocks in 2022 #4: OnMobile Global Ltd.
OnMobile Global Ltd. is one of the most promising gaming stock in India. They provide end-to-end mobile entertainment solutions. This includes apps, content partnerships, and professional services to telecom operators.
They are present in 56 countries with 84 million monthly users. Their three main business segments are –
- Ring Back Tones – They have 66 million users and nearly 10 billion tones are played every month.
- Video and Editorials – They also provide videos and editorials on sports, news, entertainment and games etc. In FY 2021, they also came up with fresh services like Storytel, Apple Music, and Vaughan etc.
- Their ONMO platform hosts the best short games with thousands of unique challenges created using artificial intelligence.
- Their legacy and quiz contest has 8 million active users and 1.5 million MAUs.
Here’s a look at the key financial ratios of OnMobile Global Ltd. as on March 05, 2022.
|Market Cap (Cr): 1,577||Face Value (₹): 10||EPS (₹): 4.08|
|Book Value (₹): 59.60||ROCE (%): 9.74||Debt to Equity: 0.01|
|Stock P/E: 45.40||ROE (%): 6.74||Dividend Yield (%): 1.01|