Netweb Technologies IPO Review: Netweb Technologies Limited is coming up with its Initial Public Offering. The IPO will open for subscription on  17 July 2023 and close on  19 July 2023.

In this article, we will look at the Netweb Technologies IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! 

Netweb Technologies IPO – About The Company

Netweb Technologies is one of India’s leading Indian-origin, owned and controlled OEMs in the space of high-end computing solutions (HCS) providing Supercomputing systems, data centre servers, private cloud and HCI, AI systems and enterprise workstations, and HPS solutions.

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From the day company’s acquisition in August 2016 until May 2023 the company has undertaken the installation of over 300 Supercomputing systems, over 50 private cloud and HCI installations, over 4,000 accelerator/GPU-based AI systems and enterprise workstations; and HPS solutions with throughput storage of up to 450 GB/ sec.

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The company caters to the needs of marquee Customers across various end-user industries such as information technology, information technology-enabled services, BFSI, entertainment and media, national data centres and government entities including in the defence sector, education and research development institutions.

The company also serves an Indian Government space research organisation and an R&D organisation of the Ministry of Electronics and Information Technology, Government of India, which is involved in R&D in information technology, electronics, and related areas such as supercomputing.

Products and Services by the company:

Following are the products and services provided by the company under different brand names:

Products of the company

(Source: RHP of the company)

Netweb Technologies IPO - Company Products

(Source: RHP of the company)

Netweb Technologies IPO Review – About The Industry

In FY 2022, the India IT Industry market was valued at $201,000 million. The market is anticipated to be $225,000 million in FY 2023 and $372,706 million by FY 2029, with an 8.8% CAGR during the forecast period (FY23-29). 

The rise of the Indian IT industry will be aided by a stable economy, the upgrade of mobile networks to 4G and 5G,  the expansion of e-commerce and the implementation of “Make in India” and PLI Schemes.

Netweb Technologies IPO – Financials

If we look at the financials of Netweb Technologies we notice that their total assets have increased from ₹110.20 crores in March 2021 to ₹265.95 crores in March 2023.

Similarly, its revenue has also increased from ₹144.29 crores in March 2021 to ₹445.65 crores in March 2023. The net profit of the company has also tripled from ₹8.23 Crores in March 2021 to ₹46.94 with a net profit margin currently standing at 10.55%.

Another good aspect about the company is that it has significantly increased its reserves every year with the reserves standing at ₹83.48 Crores as of March 2023. Good reserves in the company reflect the company’s financial stability and ability to withstand unforeseen expenses.

Though it’s not a major concern, the company’s total borrowings have also slightly increased from ₹30.54 Crores to ₹35.60 in the last three fiscal years.

Summary of Financial Information

Netweb Technologies IPO - Financial information
Financial Information

(Source: RHP of the company)

Key Players in the Market

The following table will show you a comparison of the key indicators of Netweb Technologies along with its listed industry peers as of FY23.

Netweb Technologies IPO - Financial ratios

(Source: RHP of the company)

Strengths of the Company

  • It is one of the few players in India that provides a full stack of product and solution suites with comprehensive capabilities in designing, developing, implementing and integrating high-performance computing solutions. 
  • The company is able to engage with its customers in a holistic manner as it designs, develops, and implements the entire solutions package. This has enabled them to embed themselves within the customer’s institutional framework and has also helped in customer retention and repeat business.
  • The company has continuously worked on its R&D capabilities by developing its R&D team which has enabled it to improve its systems design and architecture and to expand its products and solutions suite. 
  • Modification of designs and changes in the execution of the offerings requires technical skill set and expertise which is a significant entry barrier for new participants in the industry.
  • The company comprise an experienced board and senior management who have a significant experience in the IT industry.

Weaknesses of the Company

  • The company derives a significant portion of its revenue from its top 10 customers with whom they have not entered into a long-term contract. This exposes them to the risk of losing their established customers.
  • The company earns the majority of its revenues from a select few of our HCS offerings. Loss or decline of these offerings can adversely affect the revenues of the business.
  • The company’s capacity utilisation was low in fiscal years 2023, 2022, and 2021. Reduced output or inability to consistently achieve higher production could have a negative impact on installed capacity utilisation.
  • In terms of our foreign currency exposure, the company does not engage in hedging transactions. Any losses resulting from foreign currency exchange rate fluctuations may have a negative impact on its business, results of operations, and financial position. 
  • A major portion of the company’s revenue is derived from government-related entities which award the contract through a process of tender. Failure to successfully bid for these contracts or requirement to lower the bid value could have an adverse effect on the company’s revenue

Netweb Technologies IPO – Key IPO Information

IPO Size₹631.00 Cr
Fresh Issue₹206.00 Cr
Offer for Sale (OFS)₹425.00 Cr
Opening date17 July 2023
Closing date19 July 2023
Face Value₹2 per share
Price Band₹475 to ₹500 per share
Lot Size30
Minimum Lot Size1
Maximum Lot Size13
Listing Date27 July 2023

Promoters: Sanjay Lodha, Navin Lodha, Vivek Lodha and Niraj Lodha

Book Running Lead Manager: Equirus Capital Private Limited and IIFL Securities Limited

Registrar to the Offer: Link Intime India Private Limited

The Objective of the Issue

The proceeds from the offer for sale will not be received by the company. The company will only receive proceeds from its fresh issue which will be utilised for the following purposes:

  • Funding the capital expenditure of the company which includes Civil construction of the building for the surface mount technology (SMT) line and interior development and purchase of machinery for its new SMT production line.
  • Funding the long-term working capital requirement of the company.
  • Partial or Full repayment/prepayment of outstanding borrowing of the company.
  • General corporate purposes.

Netweb Technologies IPO – GMP

The shares of Netweb Technologies traded at a premium of 70.60% in the grey market on July 18th, 2023. The shares tarded at Rs 853. This gives it a premium of Rs 353 per share over the cap price of Rs 500.

In Closing

In this article, we looked at the details of Netweb Technologies IPO Review 2023. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

Written by Aaron Vas

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.

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