Shares of Nazara Technologies Ltd slumped over 4% in Monday's early trade following the news that the company's two step down subsidiaries Kiddopia Inc and Mediawrkz Inc held cash balances at Silicon Valley Bank (SVB).
According to the company's exchange filing, the balances held at SVB by Kiddopia Inc and Mediawrkz Inc cumulatively accounted for approximately ₹64 crores.
Kiddopia Inc is a 100% subsidiary of Paper Boat Apps Private Ltd, in which Nazara has 51.5% stake, and Mediawrkz Inc is a 100% subsidiary of Datawrkz Business Solutions Private Ltd, in which Nazara has 33% stake.
Silicon Valley Bank, a well-known financer for technology startups, failed on Friday, prompting intervention from the US federal government.
The regulators shut down the technology lender and handed it over to US Federal Deposit Insurance Corporation (FDIC) to take charge of it.
"FDIC has stated that it would issue an advance dividend to depositors within the next week with future payments coming as asset sales occurred. Regardless of the ultimate outcome and its timing, both subsidiaries continue to be well capitalised and are generating positive cash flows along with profitability. Therefore, we expect no impact on their day-to-day operations, business performance and growth plans due to the SVB event," said the company in an exchange filing.
In addition, excluding the funds affected by SVB, Nazara Group continues to keep healthy reserves of cash and cash equivalents totaling more than ₹600 crore.
On the technical front, the stock fell 45.70% from its 52-week high recorded on March 21, 2022.
According to analysts, the stock is in continuous down trend, and today it has opened with a gap down with strong volumes. It has broken below its previous support of ₹520 and further weakness towards ₹480 can be expected with ₹525 as resistance.
The stock is trading at a high day volume of 562.7K.
The stock's weekly average delivery volume is 35.42%, and the stock price fell 44.2% and underperformed its sector by 30.7% in the past year.
According to MintGenie poll, 9 analysts on an average recommend 'buy' rating for the stock.