Netweb Technologies India Ltd IPO

Published by Sharekhan Education | July 18, 2023

Amit Pathak  Sharekhan Education

Netweb Technologies India Ltd IPO has an Issue size ₹ 631 Cr. The Price Band is ₹ 475-500. The Issue opens on Monday, 17th July and closes on Wednesday, 19th July 2023

Company Overview :

Netweb Technologies is one of India’s largest manufacturers of super computing systems. It offers a full stack of product’s solution suites with comprehensive capabilities in designing, developing, implementing, and integrating high-performance computing solutions. It’s products & solutions are sold under the brand name “Tyrone”. It has collaborations with technology partners like Intel, Samsung India, Nvidia, and Seagate India. Its clientele includes names like IIT-Kanpur, NMDC Data Centre, ISRO and Ministry of Electronics and IT, Govt. of India. It has qualified for the Production linked incentive (PLI) scheme for manufacturing IT hardware and networking products in India.

Objects of Issue:

The IPO consists of a fresh issue of equity shares aggregating to Rs 206 crores, and an offer for sale (OFS) of up to Rs 425 crores by existing shareholders. The company will use the proceeds from the fresh issue to fund working capital requirements, proposed capital expenditure, and repay borrowings.  Investors must apply for a minimum of 30 shares and in multiples thereafter. After allotment, the company will list the shares on the stock exchanges. listed on the stock exchanges.

Industry Overview:

High-Performance Computing (HPC) Industry is a technologically advanced industry with high entry barriers. The Industrial Internet of Things (IIoT), Artificial intelligence (AI), and engineering, which require electronic design automation (EDA), as well as increasing usage of HPC products and services in drug discovery and healthcare, are all anticipated to drive investments in the sector. Electronics hardware manufacturing is one of the important pillars of both ‘Make in India’ and ‘Digital India’ programs of Govt. of India. The govt. has also launched IT Hardware PLI Scheme and Telecom and Networking PLI Scheme. As per a report by Frost & Sullivan, The India high-performance computing (HPC) market is expected to grow at a CAGR of 9.3% over FY 2023-29.

Competitive Strengths:

The company is one of India’s leading original equipment manufacturers for high-end computing solutions with integrated design and manufacturing capabilities. It’s proprietary designs are cloud native which are capable of catering to the evolving needs of customers. It has diverse customer base spread across different Industries which demonstrate the suitability of the company’s systems, design, and architecture across disparate applications. The company has long standing relationship with marquee customers across different industries. It also provides comprehensive implementation and service support which ensures that it caters to the end-to-end needs of its customers.

Business strategy:

The company plans to expand and augment its product portfolio by offering 5G, private 5G solutions and Network Switches. It is concentrating on the roll-out of 5G IT infrastructure, which calls for specialist solutions. It plans to expand geographic footprints in Europe, Middle East and Africa. In order to grow their customer base, the company is working to expand verticals like oil & gas in India and deepen their penetration in sectors like automobile in the western & southern regions of India, BFSI clusters in the western region of India and multi-sector corporate.

Key Concerns:

Financials:

The company has delivered revenue growth of 80% YoY in FY23. Net Profit doubled from Rs 22.5cr to Rs 47cr during the same time- period. EBITDA margins expanded to 15.7% in FY23 from 10.1% in FY21 whereas PAT margins improved to 10.5% in FY23 compared to 5.8% in FY21. RoE expanded to 50.1% in FY23 from 37.7% in FY21 These remarkable growth rates can be attributed to cost optimization, effective operational strategies, and successful implementation of business plans. At the upper end of the price band (₹475-500) the issue seems richly priced at 59.9x FY23 EPS.

Source: SEBI Red Herring Prospectus

If you would like to understand more about the concept of ‘investing’, then register for one of our free “Power Money Workshops“. And join our investing education program called “Stock Investor” to polish your investing skills. Not only do we teach you the step-by-step process of identifying fundamentally sound stocks, but you also learn how to invest like a professional. So, come and experience it yourself!

Disclaimer: 

Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer and registered office details visit link – https://www.sharekhan.com/disclaimer/Sharekhan_Education.html