Last updated on July 17, 2023
It is raining IPOs on Dalal Street and yet another public offer is in offing now after successful IPOs of IdeaForge, Cyient DLM, and Senco Gold. This time, high-end computing solutions (HCS) player Netweb Technologies is tapping the primary market with its INR 632 crore IPO. Here is everything you need to know about Netweb IPO in 10 points.
#1 Business Background
Netweb Technologies offers a comprehensive range of HCS products and services. Their offerings include high-performance computing systems, private cloud and hyper-converged infrastructure, AI systems, enterprise workstations, high-performance storage solutions, data center servers, and software/services. As an Indian-origin OEM, Netweb Technologies holds a significant position in the HCS space in terms of HPC installations in India. They cater to diverse industries such as IT, entertainment, BFSI, and government entities, including the defense sector and educational institutions.
Netweb Technologies excels in designing, manufacturing, and deploying its HCS solutions, which encompass proprietary middleware solutions, end-user utilities, and precompiled application stacks. They also develop in-house compute and storage technologies and deploy supercomputing infrastructure to support the computational requirements of businesses, academia, and research organizations. Notably, their supercomputers have been listed multiple times among the world’s top 500 supercomputers.
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#2 Netweb IPO Details
| Netweb IPO Dates | 17 – 19 July 2023 |
| Netweb IPO Price | INR 475 – 500 per share (Employee discount – INR 25 per share) |
| Fresh issue | INR 206 crore |
| Offer For Sale | 8,500,000 shares (INR 403.75 – 425 crore) |
| Total IPO size | INR 609.75 – 631 crore |
| Minimum bid (lot size) | 30 shares (INR 15,000) |
| Face Value | INR 2 per share |
| Retail Allocation | 35% |
| Listing On | BSE, NSE |
#3 Netweb IPO Objectives
- Funding capital expenditure requirements for – INR 32.29 crore
i. Civil construction of the building for the surface mount technology (SMT) line and interior development – INR 9 crore
ii. Purchase of equipment/machineries for our new SMT production line (SMT Line) – INR 23.29 crore - Funding long-term working capital requirement – INR 128.02 crore
- Repayment or pre-payment, in full or in part, of certain of our outstanding borrowings – INR 22.5 crore
- General corporate purposes
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#4 Diversification on Cards for Netweb Technologies
In addition to its established HCS offerings, Netweb Technologies has recently expanded its product lines. They have ventured into developing Network Switches and 5G ORAN Appliances, which are crucial for the data center and telecommunications industries. These products aim to address the scarcity of Indian network switch OEMs and reduce the country’s reliance on foreign OEMs. With the increasing adoption of high-throughput, low-latency network switches in data centers and 5G networks, there is a growing demand for enhanced security, reliability, and operational efficiency.
Netweb Technologies has also introduced 5G cloud on core and edge services for an international telecommunication service provider. They collaborate with leading technology partners such as Intel Americas, Inc., Advanced Micro Devices, Inc., Samsung India Electronics Private Limited, Nvidia Corporation, and Seagate India Private Limited to drive product innovation and provide customized solutions based on specific customer requirements.
Netweb IPO Review: Computing Player gets Thumbs-up from Analysts
#5 Manufacturing
Netweb Technologies operates from its manufacturing facility situated in Faridabad, Haryana. This facility serves as the hub for designing, developing, manufacturing, and testing their products. It also supports its software and service portfolio. Additionally, Netweb Technologies has 16 offices spread across India, in addition to their registered office in Faridabad.
The company’s Manufacturing Facility holds ISO certifications, including ISO 9001:2015 for Quality Management Systems, ISO 14001:2015 for Environmental Management Systems, and ISO/IEC 27001:2013 for Information Security Management Systems. These certifications ensure adherence to international benchmarks and certifications.
#6 R&D
To support a diverse range of products and solutions, Netweb Technologies relies on its dedicated research and development (R&D) team. The R&D facilities are located in Faridabad and Gurgaon, Haryana, as well as Hyderabad, Telangana. Currently, the R&D team consists of 38 members as of May 31, 2023. The in-house R&D team constitutes 13.92% of its workforce and includes 22 engineers, 7 Master’s in computer applications, 1 Bachelor’s in computer application, 3 science graduates, 4 graduates in commerce/arts, and 1 MBA.
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#7 Major Customers and Order Book
Netweb serves prominent customers in various industries, including information technology, IT-enabled services, entertainment, media, banking, financial services, insurance, national data centers, and government entities, including defense. It also works with educational institutions such as IIT Jammu, IIT Kanpur, NMDC Data Centre, Airamatrix, Graviton Research Capital LLP, INST, HL Mando Softtech India Private Limited, IIT Naya Raipur, JNU, Hemvati University, Akamai India Networks Private Limited, A.P.T. Portfolio Private Limited, Yotta Data Services Private Limited, and the Centre for Computational Biology and Bioinformatics at the Central University of Himachal Pradesh.
Additionally, the company provides services to the government’s space research organization and an R&D organization under the Ministry of Electronics and Information Technology, involved in IT, electronics, and supercomputing research.
Its order book value as at 31 March 2023 stood at INR 71.19 crore, up from INR 48.56 crore in FY 2022.
#8 Customer Concentration
A major risk factor with the company is that a significant portion of its operational revenue comes from the top 10 customers. In the fiscal years 2023, 2022, and 2021, these customers contributed INR 254.88 crore, INR 122.20 crore, and INR 74.63 crore, respectively. This accounted for 57.80%, 49.47%, and 52.26% of its total revenues.
However, the company has done well on the customer retention front. The revenue generated from repeat customers amounted to INR 399.90 crore, INR 192.02 crore, and INR 125.50 crore, representing 90.68%, 77.73%, and 87.90% of its operational revenue in fiscal years 2023, 2022, and 2021, respectively.
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#9 Netweb IPO – Financial Performance
Netweb Technologies has done well in the financial performance department. The company has managed to post consistent growth in its top line, thanks to growing demand for its products. At the same time, its expenses have grown, but at a slower clip, leading to higher profits and better margins.
| Â | FY 2021 | FY 2022 | FY 2023 |
| Revenue | 142.79 | 247.03 | 444.97 |
| Expenses | 133.19 | 217.71 | 382.69 |
| Net income | 8.17 | 22.55 | 46.94 |
| Margin (%) | 5.72 | 9.13 | 10.55 |
#10 Valuations
The improvement in financial performance has not been limited to just the top line and bottom line. Other key parameters including RONW and Debt to equity ratio have also posted marked improvements in the last 3 years. In these years, its debt-to-equity ratio has declined from 1.31 to 0.3.
| FY 2021 | FY 2022 | FY 2023 | |
| EPS | 1.62 | 4.41 | 9.07 |
| PE ratio | – | – | 52.37 – 55.13 |
| RONW (%) | 46.41 | 67.85 | 68.01 |
| NAV | 4.28 | 8.71 | 18.39 |
| ROCE (%) | 35.54 | 51.63 | 64.42 |
| EBITDA (%) | 11.13 | 14.37 | 15.89 |
| Debt/Equity | 1.31 | 0.73 | 0.30 |
