Nazara Tech shares are up 10% on Wednesday, but this analyst expects a 35% downside

Shares of Nazara Technologies Ltd. gained as much as 10% on Wednesday, October 1, even as brokerage firm CLSA projected a downside of nearly 35% from its previous closing price.

CLSA reiterated its "underperform" rating on the stock with a price target of ₹166 per share.

CLSA said the Centre's new online gaming law has barred all online money games from October 1, 2025. However, the government will continue to promote e-sports and other online games.

Fantasy sports, rummy and poker gaming companies were already under the 28% GST slab.

In January 2025, Nazara Tech had paid 800 crore to acquire 46% stake in PokerBaazi. CLSA said Nazara Tech will take a hit in PokerBaazi, and its ownership in fast-growing e-sports subsidiary Nodwin has declined below 50%.

In August, Nazara Tech's associate company Moonshine Technologies Pvt. Ltd. (Pokerbaazi) ceased real money online gaming operations. The said the move was a "matter of abundant caution and in due respect of the Centre's mandate."

In the June quarter, Nodwin had accounted for 70% of Nazara Tech's e-sports revenue, which was up 17% from the previous year.

CLSA is of the view that the valuations of Nazara Tech's shares are expensive at 48 times their estimated price-to-earnings for financial year 2027.

Of the 10 analysts that have coverage on Nazara Technologies, four have a "buy" rating, two have a "hold" rating and four have a "sell" rating.

Nazara Tech shares are trading 9.2% higher at ₹279.2 apiece on Wednesday. The stock recently begun trading adjusted for its bonus and stock split.

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