Nazara Technologies, one of India’s pioneering gaming companies, has been at the center of investor anxiety ever since the government passed the Promotion and Regulation of Online Gaming Bill 2025. The stock tumbled nearly 7 percent in intraday trade to Rs 1,302.45, erasing about Rs 916 crore in market value. While many investors were caught off guard by the sharp sell-off, one name stood out for her timely move. Rekha Jhunjhunwala had already sold her stake in Nazara well before the storm hit, saving herself an estimated Rs 334 crore in potential losses.

According to data filed with the exchanges, Rekha Jhunjhunwala held a 7.06 percent stake in Nazara Technologies at the end of March 2025, amounting to nearly 61.8 lakh shares. By June, she had exited her position completely, selling her shares at an average price of Rs 1,225 each. Her decision not only safeguarded her portfolio from the ongoing turbulence but also marked the end of the Jhunjhunwala family’s association with Nazara. Her late husband, the legendary investor Rakesh Jhunjhunwala, once held over 10 percent in the company, making it one of his prominent gaming bets.

The Wider Investor Landscape

While Rekha Jhunjhunwala made her exit, other big names in the market still hold stakes in the company. Market veteran Madhusudan Kela owns close to 11 lakh shares, while Zerodha co-founder Nikhil Kamath has over 15 lakh shares through Kamath Associates. Their exposure is now under the scanner as investors debate whether they will continue to stay invested or cut their losses given the uncertain regulatory climate.

Nazara’s indirect exposure to real money gaming through its investment in Moonshine Technology, the operator of PokerBaazi, has been a key reason for investor nervousness. Although Nazara clarified that Moonshine’s revenues are not consolidated into its books, the mere association was enough to trigger panic, especially after the new law introduced strict restrictions on money-based gaming.

Market Reaction and Brokerage Views

Brokerages have responded swiftly to the new environment. ICICI Securities downgraded Nazara Technologies to “reduce” and cut its price target sharply from Rs 1,500 to Rs 1,100. The firm assigned zero value to Nazara’s earlier valuation of Moonshine, citing the impact of the proposed ban. Still, analysts noted that Nazara’s core businesses such as gamified learning, publishing, and eSports remain unaffected and continue to have growth potential.

Nazara itself has reassured investors that real money gaming does not contribute to its revenues. In fact, the company reported no such revenue in the June quarter of FY26 and does not expect material impact on its reported earnings. Yet, the sell-off reflects how sensitive investors remain to regulatory developments, especially in high-growth but high-risk industries like gaming.

A Look at Nazara’s Fundamentals

Founded in 1999 and listed in 2021, Nazara Technologies has built a strong presence across markets in India, Africa, and North America. Between FY20 and FY25, the company delivered a compound annual growth rate of 46 percent in revenues, touching Rs 1,624 crore in the last financial year. Despite this growth, its profitability remains uneven. The company reported net profits of Rs 51 crore in FY25, but also logged operating losses of Rs 114 crore.

At its current price of around Rs 1,300, the stock trades at a lofty price-to-earnings multiple of nearly 198 times, well above the industry median. These stretched valuations could come under more scrutiny if regulatory challenges persist. For now, management continues to bet on acquisitions, eSports growth, and artificial intelligence adoption to strengthen its business model and expand globally.

What Investors Can Learn

Rekha Jhunjhunwala’s timely exit underlines the importance of tracking regulatory risk and taking bold calls when needed. By exiting before the Gaming Bill came into force, she avoided significant losses and demonstrated the discipline that separates seasoned investors from the rest. For retail investors, the lesson is clear. High-growth sectors like online gaming may offer strong opportunities, but they also come with risks that can change overnight with new laws and government decisions.

 


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