Netweb Technologies IPO - The Leading Player In High-End Computing Solutions: Geojit

Geojit Research's IPO Report

Netweb Technologies India Ltd. launched its initial public offering today.

At the upper price band of Rs 500, Netweb Technologies is available at a price/earning of 59.7 times (FY23), which appears reasonably priced compared to peers.

With effective management, consistent growth, an expanding product portfolio, geographic footprints and digital India initiative by the Government, Netweb Technologies is well-positioned to capitalise on the Indian IT industry's growth. Therefore, we assign a 'Subscribe' rating for the issue on a short to medium-term basis.

Purpose of IPO

The IPO consists of a fresh issue of Rs 206 crore and offer for sale of 8,500,000 equity shares, amounting to Rs 425 crore. The objects of the offer are:

• Funding capital expenditure (Rs 32.3 crore);

• funding long term working capital (Rs 128 crore);

• repayment or pre-payment of the outstanding borrowings (Rs 22.5 crore);

• general corporate purposes.

Key Risks

1. Dependence on top 10 customers for ~60 of the revenue in FY23.

2. Majority of the revenue in FY23 (~72%) comes from higher education and research and IT and ITES industries.

Investment Rationale

• The Indian IT Industry market worth $22,500 crore in FY23 and is forecasted to reach $37,271 crore by FY29, with a compound annual growth rate of 8.8% over the period (FY23-29).

• Netweb Technologies has both design and manufacturing capabilities in house and has undertaken the installation of over 300 supercomputing systems and over 4,000 accelerator/ graphics processing unit based AI systems and enterprise workstations as of May 2023.

• Netweb is one of the few original equipment manufacturers that has qualified for the production linked incentives scheme for IT hardware and networking products manufacturing in India.

• Intel, AMD, Samsung India, and Nvidia are some of the technology partners Netweb collaborates with to design and innovate product offerings.

• The company has raised Rs 51 crore from pre-IPO placement at an issue price of Rs 500 per share from marquee institutional investors, including LG Family Trust, and Anupama Kishore Patil, among others.

• Netweb is expanding its geographical footprint, targeting the European, Middle Eastern, and African markets.

• In FY23, Netweb’s revenue rose by 80% YoY to Rs 445 crore, compared to Rs 247 crore in the previous year. Profit after tax doubled from Rs 22.5 crore to Rs 47 crore during the same period.

• Netweb’s profitability has improved significantly, with Ebitda margins expanding to 15.7% in FY23 from 10.1% in FY21. Similarly, profit after tax margins improved to 10.5% in FY23 compared to 5.8% in FY21.

About the company

Netweb Technologies is a Delhi-based company that specialises in high-end computing solutions. They serve various sectors, including IT, IT enabled services, entertainment, media, banking, financial services and insurance, national data centers, and government entities.

The company operates a manufacturing facility in Faridabad, Haryana, and has 16 offices across India. Netweb Technologies’ three supercomputers have been listed among the world's top 500 supercomputers 11 times.

Click on the attachment to read the full IPO report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.