Games are no more just games. Who would have thought gaming could be a career choice for kids of a generation? The gaming industry is almost half a decade old though. The improving technology has forever been the backbone of the industry’s growth, and the COVID-19 pandemic gave it even more boost. The development of the gaming industry can easily be directly proportional to the technological advancements that will happen in the coming years.
Keeping in mind the growth prospects of the gaming industry, this article will talk about the best gaming stock in India and a brief about the industry itself.
The Gaming Industry
The popularity of gaming and online games has been rising for the past few years, from 2018 to 2020, i.e, the pre-pandemic figures rose from 250 million to 400 million people. The industry is valued at almost 170 Billion USD and will reach 300 Billion USD in 2025. The mobile games alone will cross 100 Billion USD by the end of 203. The industry in India, in particular, is valued at approximately 950 million USD and is expected to grow at a CAGR of 41%.
As per the BCG Sequoia India report, the gaming industry in India is 1% of the global value. The revenue of the industry is said to reach 5 Billion USD by 2025. In India, these revenues are expected to grow at 38% CAGR, which is much higher than in other markets like China and the United States.
The Best Gaming Stocks
After having a brief about the industry, we are ready to learn about the stocks which have been performing and have the potential to give good returns in the future too. Following are the best gaming stocks in India –
|Stock Name||PE Ratio||Return on Equity|
|Delta Corp Limited||131.49||3.31|
We will discuss the above stocks one by one below –
1. Delta Corp Limited
Delta Corp is the biggest company when comes to gaming. The company is one of its kind since it is the only listed company in India that is also in the casino business. The company owns almost 50% of the organised Casinos in the country. It is the owner of the famous casinos Deltin Royale and Deltin JAQK. The company is also the owner of the famous website assa52rummy.com which is popular for games like poker.
Other than the famous games and websites it owns, the company also portrays a good financial record. Currently trading at around Rs. 200, the company had a net profit of Rs 616 Crores in the year ending 2022 and Rs 273 Crores for December 2022 quarter.
Even though the company has a promoter holding of 33.3%, the almost negligible debt of the company does put it in a good position and gives the company excellent growth potential in the coming years.
2. Zensar Technologies
Currently trading at Rs. 260, the company operates in more than 15 countries globally and has one of the top-rated software services globally. The main engagements of the companies are in software development, consulting and Package solutions. On a larger picture, the company is a part of RPG Group which has a further diversified presence in sectors like Infrastructure and tyres. Zensar Tech being a part of this 263 Billion group has a strong financial background and support.
Apart from having a strong owner like the RPG Group, the company was also invested in by Rakesh Jhunjhunwala, which adds to the valuation of the company.
The company had a profit of Rs 421 Crores for the previous financial year and a net profit of 76 Croes for the quarter that ended in December 2022. The revenues of the company have also been on a rising trend since 2018 when only 2021 was an exception. The revenue for the latest financial year ended was 4243 Crores.
3. OnMobile Global
The closing price of this stock on 10 February 2023, was Rs 80.1. The company trades on both BSE and NSE. OnMobile Global has been listed in the market since 2008 and has seen decent growth since. It should also be taken into consideration that the company has a majority of its revenue generated from Ringback Tones, which it is also the global leader in.
OnMobile does not specifically operate in the gaming industry, having 7% of its revenues from gaming, the company is definitely one of the initial companies in the industry and can have a good share in the sector in the coming years assuming it continues to grow at the same pace. The company may not be the top performer in the industry given the already advanced positions held by other companies but does have the potential of providing fair returns.
The biggest negative of the company is that the revenues of the company have been declining since 2018, and the profit margins are also not showing a very good picture. The company is however completely debt free and maintains a good dividend payout ratio of 46.8%. They probably need some investments in its research and development and some debt would not harm them, bringing in better investments and improved profits and revenues.
5. Nazara technologies
Trading at around Rs. 550, this India-based company is well-established in gaming and sports media company. Other than India, the company also has a presence in North America and Africa. The company is the owner of the famous game Chhota Bheem Jungle Run and Trivia games. This Jhunjhunwala-backed company is not in a very good financial position though. The negative PE Ratio of the company says all, about how the company has not been profiting and has negative returns.
Despite being a loss-making company, they have been able to make various investments in several gaming apps and sites and have also managed to improve their Debtor days from 68 to 49.
However, these figures cannot cover the fact that the company has a low promoter holding of just 19%, which can be alarming when coupled with the losses the company has been making recently. Observing this company for some months and hence making a decision and opinion would be a wise decision at the moment for this company.
These were the companies that are the major players in the gaming industry in India. Other than these, companies like Reliance have been taking steps to launch their very own JIO Games, and Tata Consultancy Services also have been providing software to various gaming companies in recent years. Both these companies are taking their steps for this under-penetrated industry and can prove to be worth an investment. The gaming industry has been rising as stated earlier also and will be growing given the pace with which the technology is penetrating deeper into the country. Better the reach of technology, the better the reach of games among the population.