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Netweb Technologies India IPO entails issue of 1,26,20,000 shares which at the upper end of the price bandtranslate to an issue size of ₹631 crore. The Issue includes an offer for sale of 85,00,000 ( ₹425 crore) and a fresh issue of 41,20,000 shares (₹206 crore). Netweb Technologies India Limited provides high-end computing solutions which includes computing and supercomputing systems, making available shared infrastructure facilities like private cloud and hyper-converged infrastructure, AI systems, high performance storage and data Centre servers.

About Netweb Technologies India IPO:

• Netweb Technologies India is a 24 year old company and is one of India’s leading high-end computing solutions (HCS) provider, with fully integrated design and manufacturing capabilities.
• The company operates out of its manufacturing facility located in Faridabad, Haryana, which is equipped with capabilities to (i) design, develop, manufacture and test the products, and (ii) cater to its software and service portfolio. The manufacturing facility is equipped with various machinery and quality testing equipment, such as, climatic chamber with data logger, energy efficiency tester, tool and kits for integration and testing, clamp meter, digital multimeter, ESD generator, sound level meter, insulation resistance tester, etc.
• Its HCS offerings comprises (i) high performance computing (Supercomputing / HPC) systems; (ii) private cloud and hyperconverged infrastructure (HCI); (iii) AI systems and enterprise workstations; (iv) high performance storage (HPS / Enterprise Storage System) solutions; (v) data centre servers; and (vi) software and services for our HCS offerings. In terms of number of HPC installations, it is one of the most significant OEMs in India.

• Out of its HCS offerings, Supercomputing systems, and private cloud and HCI have generally been the largest revenue generating business verticals. Set out below is the detail of revenue from operations from Supercomputing systems and private cloud and HCI business verticals in the Fiscal 2023, Fiscal 2022 and Fiscal 2021:

• As of May 31, 2023, Netweb Technologies India Ltd. R&D team comprised 38 members, 273 full-time employees, and 6 contract workers, and its order book stood at Rs. 90.21 cr..
• Sanjay Lodha, Navin Lodha, Vivek Lodha and Niraj Lodha are the Promoters of Company.*

Netweb Technologies India IPO: Financials

Anchor Investors

Netweb Technologies India made allocation of 37.80 lakh equity shares to 25 anchor investors at Rs 500 per share. Promiment investors included names like Nomura Funds, Goldman Sachs Funds, Eastspring Investments India Fund, Franklin Templeton, Nippon Life India Trusteee, HDFC Mutual Fund, ICICI Prudential, Aditya Birla Sun Life Trustee, Axis Mutual Fund, Motilal Oswal Mutual Fund, Whiteoak etc.

Netweb Technologies India IPO: Salient Points

• Promoters stake shall come down from 98% to 76% post IPO.
• The company is compliant with the “Make in India” policy of the Government of India.
• Till date, Netweb Technologies India Ltd has undertaken installations of over 300 Supercomputing systems, 50 private cloud and HCI installations and over 4,000 accelerator-based AI systems.
• Its clients includes end-user industries like IT, ITES, entertainment, BFSI as well as the government owned defence sector and the education and R&D segment. In terms of specific client portfolios, some examples of its institutional and academic clients include IIT Jammu, IIT Kanpur, NMDC Data Centre, Graviton Research Capital, Institute of Nano Science and Technology, Jawaharlal Nehru University (JNU) etc. It also supports the Indian space program with its existing computing capabilities.
• The Net Proceeds are proposed to be used as below (Rs. Million)

• Company is undertaking Rs. 322 million capex for a greenfield plant at Faridabad,
• H2FY23 has been good with recorded revenue of Rs. 302 cr. H2FY23 PAT stood at Rs. 32 cr. As compatred to this its had Rs. 4 cr PAT in FY20 which in FY23 jumped to Rs. 47 cr.
• FY23 gross margins were healthy at 27%
• Long term debt is rated A-/Stable from Crisil.
• Netweb has technological collaboration with leading companies like Intel, AMD Inc, Samsung, Nvidia, Seagate.
• It has been warded 2 PLIs for IT hardware and telecom and networking products.
• In Fiscal 2023, it has forayed into developing new product lines, viz., Network Switches and 5G ORAN Appliances, and have recently introduced 5G cloud on core and edge for an international telecommunication service provider.
• Artificial intelligence (AI), currently accounts for 7% of the revenue. This has scope to expand fast in future.
• Three of company’s proprietary supercomputers feature in world’s Top 500 list, including ‘Param Ambar’ which used by ISRO.
• Deployed in 2023 by Netweb Technologies, Airawat PSAI, stands as India’s largest and fastest AI supercomputing system. Airawat PSAI ranks 75th among the world’s top 500 supercomputers.
• On FY23 earnings Netweb Technologies India IPO is valued at 60x P/E. EMS industry presently is enjoying good valuation multiple.
• Make hay while the sun shines. Netweb Technologies India IPO is entering at a time when EMS sector is getting lot of attention. Compared to other EMS players Netweb Technologies India is not into contract manufacturing and does this part for own requirements.
• Management has guided for 40% revenue CAGR for the next few years.
• I intend to apply in Netweb Technologies India IPO. In my view there are reasonably good chances of listing gains as well as steady performance there after. However It is worth mentioning that my opinions have many time been off the mark or have been proved wrong.
• GMP as reported on social media has been around Rs. 300.
• On flip side promoters recently settled an insider trading case with SEBI. The company has resorted to changing auditors.
• Company has high trade receivables cycles with holding period that has increased from, 94 days in Fiscal 2021, 99 days in Fiscal 2022, and 94 days in Fiscal 2023. The company attributes this to nature of its clients.
• The company capacity utilization is low. Management is of view that capacity utilization is not the measure for this type of high end business and capabilities matter more as Company designs, manufactures and deploys its HCS offerings comprising proprietary middleware solutions, end user utilities and precompiled application stack. The Company’s order book for its HCS offerings consists of bundling both hardware and software offerings and includes pre-compiled application stacks thereby not impacting the capacity utilization of the Company
• Please do your own diligence as this IPO as there is good amount of risk in all equity investments including IPOs.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.