Is Nazara Still a Good Bet After Gaming Ban in India?

​​​​Nazara Technologies, India’s only listed company in the online gaming space, is under scrutiny following the passage of the Promotion and Regulation of Online Gaming Act, 2025, which bans real-money gaming in India.

Finology Research Desk has analysed the company and the impact of this development on Nazara this week. Find out in this article.

What makes the Indian gaming industry special?

The Indian online gaming industry was valued at USD 3.7 billion in 2024 and is expected to grow at a CAGR of ~19.7%, reaching USD 9.1 billion by 2029. This growth is being driven by rising smartphone penetration, increasing internet usage, rising disposable incomes and increasing interest in eSports among young consumers.

 

Source: Economic Times

Real money gaming (RMG) dominated the online gaming industry, contributing 85.7% to the sector's revenue in FY24, whereas non-real money gaming accounted for just a 14.3% share. With around 488 million gamers as of FY24, India has become the second-largest number of online gamers in the world after China, which has around 722 million gamers.

 

 

Source: Economic Times article

As of 2023, mobile gaming held a strong position, accounting for an impressive share of 90% of the total gaming revenue, whereas non-mobile gaming (like PC, Consoles) contributed only 10%.

 

Source: JM Financial report

eSports has emerged as one of the fastest-growing segments in the industry, driven by rising participation in competitive games and increasing prize pools. According to Animation Xpress' estimations, India has 1,50,000 eSports players, with over 90% participating in online mobile tournaments. The Indian eSports market, valued at USD 200 million in 2024, is projected to reach USD 1,088 million by 2033, growing at a CAGR of 18.4% during this period.

 

Business model of Nazara Technologies

Founded in 1999, Nazara Technologies, the only listed gaming company in India, is engaged in developing and publishing mobile games, organising eSports tournaments, and running in-game advertising in its own games as well as in other developers' apps.

Its portfolio includes popular mobile titles like World Cricket Championship, large-scale eSports events managed through its subsidiary Nodwin Gaming, and kids' learning apps like Kiddopia. The company generates revenue through in-app purchases, ads, subscriptions, and sponsorships, and operates in over 60 countries worldwide.

Revenue mix of Nazara Technologies

The company reported consolidated revenue of Rs 1,624 crore in FY25, up 42.7% from Rs 1,138 crore in FY24. The company generates revenue from three segments comprising: Gaming, eSports and Adtech.

Source: Investor presentation Q4 FY25

• Gaming, which includes mobile-based freemium games (like World Cricket Championship) and subscription-based educational games for kids (like Kiddopia), contributed Rs 518 crore or 32% to the revenue, up 27% year-on-year. Profitability improved sharply with EBITDA at Rs 103 crore, a 27% rise, translating to a margin of 20%.

• eSports, focused on organising online competitive gaming tournaments (like Battlegrounds Mobile India), remained the largest contributor with Rs 763 crore or 47% of the revenue, a 21% increase. EBITDA, however, fell 2% to Rs 62 crore, pulling margins down to 8.1% underperformance of its recent acquisition, Freaks4U and the cancellation of its NH7 Weekender music festival in Pune.

• Adtech, which handles advertising inside mobile games and apps for third-party developers as well as Nazara’s own titles, has become the fastest-growing segment. It reported revenue of Rs 346 crore in FY25, up 233% year-on-year, contributing 21% to overall sales. EBITDA also surged 137% to Rs 19.6 crore, with a margin of 5.7%.

Unit economics of Nazara Technologies

Source: Financial results Q4 FY25

Cost of goods sold (COGS) decreased 50% from Rs 80 crore in FY24 to Rs 40 crore in FY25. However, as a percentage of total income, these costs have remained relatively low, ranging between 2.3% and 6.5% over the past three years.

Selling, general, and administrative expenses (SG&A), the largest component of the company’s total expenses, comprising advertisement expenses, commissions, content, event & web server expenses, increased from Rs 636 crore in FY24 to Rs 996 crore in FY25, largely due to increased advertisement expenses during the year. These expenses have ranged from 52% to 70% of the total income over the past five years.

Employee benefit expenses rose 54% from Rs 186 crore in FY24 to Rs 287 crore in FY25. As a share of total income, these costs have ranged around 10%-17% over the past five years.

Finance costs increased 43% from Rs 7 crore in FY24 to Rs 10 crore in FY25, mainly due to an increase in lease liabilities and borrowings, which have increased to Rs 92 crore in FY25. 

Other expenses rose 26% from Rs 134 crore in FY24 to Rs 169 crore in FY25, which includes legal and professional expenses, sales promotion expenses, travelling and conveyance, etc. However, as a percentage of total income, other expenses have declined from 11% in FY24 to about 9.8% in FY25.

Tax expenses increased marginally from Rs 14 crore in FY24 to Rs 15 crore in FY25, and the net profit margin fell from 7.3% in FY24 to 3.6% in FY25, reflecting the impact of higher SG&A, employee benefit and other expenses.

 

India’s New Online Gaming Act, 2025

India’s new Online Gaming Act came into force on August 22, 2025, after receiving presidential assent. The law marks a major shift for the country’s online gaming sector. It specifically targets real-money games such as fantasy sports, poker, and rummy, amid growing concerns over addiction, suicides and fraud.

Under this law, all games where players stake money in hopes of making a profit are completely banned, whether the game is based on skill, luck, or both. It’s now illegal not only to run these games, but also to advertise or support them in any way, including processing payments through banks or apps.

Source: pib.gov.in

Apart from the ban, the Act strongly supports eSports and online social games. eSports (competitive online gaming) are now officially recognised and promoted, with plans for training academies, national tournaments, and enhanced government support. Social gaming (for fun or education) is encouraged for recreation and skill building. 

To ensure compliance, a new online gaming authority is being set up to decide what games are legal, register gaming platforms, and oversee everything related to such games. Police and officials also have the right to search homes or online accounts without warrants if they suspect illegal gaming is happening.

Overall, this law is about keeping people safe from financial and mental harm, but also making sure healthy gaming like eSports and social play has the chance to grow in India.

Our CEO, Mr. Pranjal Kamra, recently covered the online money gaming ban saga and shared his views on this. Watch the complete video here.

Impact of the New Online Gaming Act, 2025, on Nazara Technologies

Nazara Technologies has faced significant stock volatility following the Promotion and Regulation of Online Gaming Act, 2025, which bans real-money online gaming platforms, including PokerBaazi, in which Nazara holds a substantial stake.

In September 2024, the company invested Rs 832 crore to acquire a 47.7% stake in Moonshine Technology, PokerBaazi’s parent company, aiming to strengthen its position in the online real-money skill-gaming segment. The investment was structured through a definitive agreement of Rs 832 crore via a secondary transaction, and the board approved an additional equity infusion of up to Rs 150 crore through compulsorily convertible preference shares, bringing the total planned investment to Rs 982 crore.

Following the ban, Nazara’s share price declined by over 20%, reflecting investor concerns about a potential write-off of its Moonshine investment. The company clarified that it has no direct exposure to real-money gaming, and Moonshine’s revenue is not consolidated into its financials. Its Q1 FY26 results had no revenue or EBITDA contribution from this segment, highlighting that Nazara’s core operations remain unaffected.

As of now, Nazara holds a 46.07% stake in Moonshine and has cancelled its deal to acquire an additional 0.96% stake for Rs 15.9 crore following the ban on real-money gaming. The company is reportedly considering writing off its entire investment of around Rs 1,060 crore in Moonshine. This move has affected investor sentiment despite Nazara having no direct operational exposure to the real money gaming segment.

The Bottom Line

While Nazara’s core business remains largely unaffected, the real-money gaming ban puts its Moonshine stake at risk. A potential ~Rs 1,060 crore write-off has affected investor sentiment, showing how even indirect exposures can influence market perception, even as core operations continue without disruption. The real thing to watch is how well Nazara navigates this situation and moves forward. What do you think lies ahead for the company?