Top Gaming Stocks in India You Must Know

Introduction:

The means of entertainment have increased in number in the last few years. The number of subscription-based platforms increased initially, and now, people are eying another rapidly growing mode of entertainment- gaming. With the gaming trend on the rise, so are gaming stocks.

Millions of Indian gamers are playing and investing in gaming companies. If you want to join the “in” crowd of gaming investors, it’s essential to understand the Indian gaming sector before making gaming stocks a part of your stock portfolio management.

Gaming Sector in India:

India is seeing an extraordinary rise in gaming culture, from casual mobile and PC gaming to organized esports tournaments. This surge is driven by broadband expansion in Tier-II and Tier-III cities and affordable data and smartphones, making gaming accessible to a broader audience.

A major milestone came in 2022 when the Commonwealth Esports Championship highlighted the global recognition of esports. The Indian DOTA 2 squad’s bronze medal was a proud achievement, further boosting the momentum. By 2023, India’s online gamer community had grown to 442 million, making it the second-largest globally, just behind China.

India also leads mobile gaming app downloads and boasts the largest fantasy sports market with 180 million users. With 275 game developers, the sector saw a 21% increase in transaction-based revenues in 2022 and is projected to grow by 20% by FY25, reaching INR 231 billion. The industry, growing at a CAGR of 33%, is set to hit INR 25,300 crore by FY27. In the last five years, Indian gaming has attracted $2.8 billion in investments, creating three unicorns: Game 24X7, Dream11, and Mobile Premier League.

Seeing the potential, the government is also stepping in with supportive measures. Amendments to the Information Technology Rules of 2021 aim to regulate online gaming and protect users. Additionally, the Animation, Visual Effects, Gaming, and Comics (AVGC) Promotion Task Force has been established, in partnership with IIT Bombay, to boost domestic capabilities, with a National AVGC policy in the works.

Approving 100% Foreign Direct Investment (FDI) in the gaming sector opens doors for domestic and international investors. By 2029, India’s gaming market is expected to reach USD 7.24 billion, driven by a CAGR of 15.68%.

What fueled this growth in Gaming Stocks?

• Young Population:

India’s gaming industry benefits from its youthful demographic, with 46% of the population under twenty-five. This sizable young population drives the industry’s growth.

• Rising Smartphone Usage:  

The number of smartphone users in India is rapidly increasing, with 502.2 million users and a penetration rate of 36.7%. Mobile gaming apps dominate, making up 86% of all gaming apps.

• Affordable Internet:  

Internet in India is highly affordable, with data costing just USD 0.26 per GB compared to the global average of USD 8.53. This affordability leads to an average monthly data usage of 14.6 GB per person.

• Impact of COVID-19:

The pandemic significantly boosted the gaming sector, with a 170% increase in new gamers in tier III cities.

• Booming IT Sector: 

Thanks to its growing pool of talented developers, India’s thriving IT sector has positioned the country as a key backend development hub for gaming companies.

• Digital Payments Adoption:

The widespread use of digital payment methods has accelerated online transactions on gaming platforms, contributing to the industry’s rapid growth.

So, considering the growth drivers, we can safely assume that the growth is set to continue for a long time. The question is, how can we benefit from this growth? What type of companies should we target when investing to benefit from this trend?

What Gaming Businesses to Invest in?

Gaming stocks cover many businesses creating, producing, and distributing video games. They also include companies that provide hardware, software, and services to the gaming industry. These businesses can be grouped into a few categories:

• Game Developers: 

These companies design and produce video games for consoles, PCs, and mobile devices. They handle everything from conceptualizing and developing the games to programming them, ensuring players have an immersive experience.

• Game Publishers:

Publishers focus on marketing, distributing, and monetizing video games. They work closely with game developers, providing funding, resources, and expertise to bring games to market. Publishers also manage intellectual property, revenue-sharing plans, and licensing agreements.

• Gaming Platforms and Service Providers:  

This group includes manufacturers of gaming consoles, controllers, and other essential hardware, with major players like Nintendo, Microsoft, and Sony leading the market. 

• Esports Organizations and Platforms: 

As esports grow, companies that organize leagues and tournaments and provide platforms for competitive gaming have emerged as a distinct segment within the gaming industry.

Top Gaming Stocks to Invest in 2024:

S.No.	Companies	Market Cap as of 26-08-24	P/E ratio	Market Price (25-08-24 CMP)	5-year CAGR Profit	ROCE (FY2024)
1	Tata Consultancy Services	16,39,771.53	33.78	4463.9	8%	64.3%
2	Infosys	7,81,199.67	28.98	1862.1	11%	40%
3	Tech Mahindra	1,58,343.24	61.26	1598.4	-11%	11.9%
4	Zensar Technologies Limited	17,578.38	26.37	775.8	17%	25.2%
5	Nazara Technologies	7,171.95	76.85	940.8	61%	5.93%
6	Delta Corp Limited	3,452.64	21.92	128.91	3%	12.4%
7	OnMobile Global Limited	927.65	–	88.66	-3%	4.66%

Overview of the Top Game Stocks:

1. Tata Consultancy Services:

Tata Consultancy Services Limited (TCS), a subsidiary of Tata Sons Private Limited, is a top IT services provider. They offer various services, including IoT, quality engineering, blockchain, consulting, business process outsourcing, and cloud services. 

TCS serves various industries, including banking, insurance, media, technology, and healthcare. Its software products include TCS MasterCraft, TCS Optumera, and TCS iON, among others. For the June 2024 quarter, TCS reported a 9% increase in net profit to Rs.12,105 crore, up from Rs.11,120 crore in the previous year.

2. Infosys:

Infosys Limited, founded in 1981, is a digital services and consulting company that offers technology-driven business solutions. Its services help clients transform their businesses by enhancing customer experience, leveraging AI-based analytics, engineering digital products, modernizing legacy systems, migrating to cloud applications, and implementing advanced cybersecurity. About 57% of its revenue comes from digital services. In FY2024, Infosys reported a revenue of Rs.1,53,670 crore, reflecting a 4.7% year-on-year growth.

3. Tech Mahindra:

Tech Mahindra is a top player in digital technology, offering IT services, consulting, and business solutions to clients worldwide. Its skilled game developers create fun and immersive experiences across mobile, PC, and console platforms. Tech Mahindra’s cloud gaming solution allows you to enjoy high-quality gaming on any device—no console or workstation needed. This is perfect for OTT, PayTV, and Telecom operators looking to reduce subscriber churn and boost engagement. Their Esports solution lets organizers host tournaments and manage streaming, rewards, and profiles, with monetization options like Ads or premium offerings.

4. Zensar Technologies Limited:

Zensar Technologies Limited is a digital and tech company focused on helping gaming firms boost speed and efficiency. It has two key areas: application management services (AMS) and infrastructure management services (IMS). 

AMS accounts for 84% of Zensar’s revenue, while IMS accounts for 16%. Zensar has a specialized Game Testing Centre of Excellence to support gaming companies’ testing and development needs. In FY2024, the company earned Rs.4901.9 crore, a 1.1% increase from FY2023. Zensar has significantly reduced its debt and is nearly debt-free. It also maintains a strong dividend payout of 30.8%.

5. Nazara Technologies:

Nazara Technologies is India’s leading gaming and sports media platform, offering interactive and immersive gaming experiences. It covers eSports, interactive gaming, and gamified learning. In mobile gaming, it features popular titles like WCC and Carrom Clash. For eSports and media, it has Nodwin and Sportskeeda, while Halaplay and Qunami cater to skill-based, fantasy, and trivia games. As of FY2023, Nazara has over 10 crore active users each month. 

Rekha Jhunjhunwala, wife of the Late Rakesh Jhunjhunwala, holds around 64 lakh shares, accounting for 8.37% of the company’s net issued paid-up capital. As of FY2024, the company has reduced its debt considerably and generated a net profit of Rs.75 crore.

6. Delta Corp Limited:

Delta Corporation, formerly Arrow Webtex Limited, is India’s largest gaming company. It operates in online skill gaming, gaming, and hospitality. As the top gaming brand in India, it has over 2000 live gaming positions in the casino sector. Delta Corp’s business spans three main areas: casinos, online gaming, and hospitality. Its casinos and online skill gaming are based in Goa and Sikkim. The company’s online poker site, Adda52.com, accounts for 94% of its revenue, with the remaining 6% coming from hospitality. As of FY2024, it delivered a net profit of Rs.245 crore, a little less than FY2023 (Rs.262 crore) but maintaining the big jump from FY2022 profit of Rs.68 crore. 

7. OnMobile Global Limited:

OnMobile Global Ltd. is a leading gaming stock in India. They offer complete mobile entertainment solutions, including apps, content partnerships, and professional services for telecom operators. With a presence in 56 countries, they reach 8.4 crore monthly users. Their main business areas are:

• Ring Back Tones: Serving 6.6 crore users, with nearly 1000 crore tunes played monthly.
• Video and Editorials: Providing content on sports, news, entertainment, and games, along with new services like Storytel and Apple Music in FY2021.
• ONMO Platform: Featuring AI-powered short games with thousands of unique challenges.
• Legacy and Quiz Contest: Engaging 0.8 crore active users and 0.15 crore monthly active users (MAUs).

The top gaming stocks or online gaming stocks do have the potential to ride the growth wave of the growing gaming industry, but should you directly just invest in the top gaming stocks?

Factors to Consider Before Investing in Gaming Company Stocks:

• Focus on innovative game concepts. Investing in unique ideas with solid initial funding can lead to commercial success and higher returns.
• Assess the leadership and management teams for industry experience and ethical conduct. Companies with strong, moral leadership align investments with integrity and reduce risks.
• Check if the company’s current valuation matches its financial performance and growth prospects. This will help determine whether the investment is worthwhile.
• Evaluate factors like product offerings, customer base, and pricing to understand the company’s position in the competitive gaming industry.
• Be aware of regulatory and legal risks. Changes in gaming laws or privacy regulations can impact the industry, so invest in companies familiar with the regulatory landscape.
• Analyze the company’s revenue growth, profit margins, and cash flow to identify financially stable companies with growth potential.

Bottomline:

The COVID-19 pandemic caused severe economic losses due to lockdowns, but it transformed India’s gaming industry into a global leader. With internet penetration expected to reach 30% soon, the gaming market is poised for further growth. You must consult some of the best stock market advisory to find your tailored answer to ‘How to invest in share market?’. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

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