Shares of Nazara Tech plummeted over 21% in two sessions as India's lower house of parliament passed a bill banning online games with monetary stakes. Analysts have expressed concerns over the impact of the bill on the gaming sector, causing a sharp decline in the stock price.
Nazara Tech, a gaming platform operator, saw its stock price drop by 9.5% in a single day, following a 13% slide the day before. This led to the stock hitting a low of 1,125.1 rupees, the lowest in 15 weeks. The bill, which is now awaiting review in the upper house of parliament, prohibits offering online money games and related services, with violators facing up to three years in jail and fines.
ICICI Securities has downgraded Nazara to "reduce" from "add," highlighting the bill's potential impact on real-money gaming in India. The brokerage also slashed the price target for Nazara and reduced the valuation of Moonshine Technology, which operates PokerBaazi and other card-based platforms, to zero from 400 rupees. Nazara holds a significant stake of 47.71% in Moonshine.
Analysts suggest that the move could make real-money gaming "infeasible" in India. Despite being rated as a "hold" on average, Nazara's stock has experienced a significant decline, erasing more than half of its year-to-date gains. As of Tuesday, the stock is only up 9% this year, compared to 38% previously.
Following the news, shares of peers OnMobile Global (ONMO.NS) and Delta Corp (DELT.NS) also fell by about 3% on Wednesday. The proposal to ban online money games, citing addiction risks, has sent ripples through the gaming sector, leading to market uncertainties and stock price declines.
