Shares of Nazara Technologies were down 1.39% to ₹899.35 on November 18 following the announcement of its Q2 FY2024 financial results. Despite year-on-year (YoY) growth in revenue and profit, the company faced operational challenges, leading to a decline in EBITDA margins.
Q2 FY2024 Key Financial Highlights:
- Revenue Growth:
- Revenue rose 7.3% YoY to ₹318.94 crore, showcasing consistent topline growth.
- Sequentially, revenue surged 27.54%, indicating robust short-term performance.
- Profit Growth:
- Net profit increased 10.85% YoY to ₹21.97 crore, reflecting healthy bottom-line growth.
- However, sequentially, profit declined 2.92%, raising concerns over sustained profitability.
- Margins and Operating Efficiency:
- EBITDA margins contracted to 7.5% from 8.8% YoY, driven by higher operational costs.
- Selling, General & Administrative expenses rose significantly by 31.88% QoQ and 28.82% YoY, impacting overall profitability.
- Operating income faced a steep decline of 105.98% QoQ and 105% YoY, indicating pressure on operational efficiency.
- Earnings per Share (EPS):
- EPS improved 17.47% YoY to ₹3.35, underscoring profitability despite rising expenses.
Investors expressed mixed sentiment following the results. While revenue and profit growth were positive, shrinking margins and operational inefficiencies have raised concerns. Analysts are likely to keep a close watch on the company’s cost management strategies in the upcoming quarters.
Nazara Technologies needs to address rising operational costs to maintain its profitability momentum. With its strong revenue growth, the company has room to improve operational efficiency, which will be critical in regaining investor confidence.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Always consult a financial advisor before making investment decisions.
