Netweb Technologies Makes Strong Debut, Listing with an 88% Premium

Netweb Technologies Makes a Stellar Debut, Surges 88% on the First Day of Trading – Strong IPO Subscription and Favorable Equity Market Conditions Boost Investor Confidence.

Netweb Technologies, a high-end computing solutions provider, witnessed an impressive first day of trading on July 27, with its stock opening at a remarkable premium of 88% on both the NSE and BSE. The stock opened at Rs 947 on the NSE and Rs 942 on the BSE, compared to its issue price of Rs 500 per share.

The company’s public issue received overwhelming response from investors during the subscription period from July 17 to July 19, with a subscription of 90.36 times. Qualified institutional buyers showed exceptional support, subscribing 228.91 times the reserved portion, while high net worth individuals and retail investors subscribed 81.81 times and 19.15 times, respectively. The portion allocated for employees was also well-received, with a subscription of 53.13 times.

Netweb Technologies successfully raised Rs 631 crore through its public issue, which included a fresh issue of Rs 206 crore and an offer for sale of Rs 425 crore by promoters. The offer price was set in the range of Rs 475 to Rs 500 per share.

The positive equity market conditions, with benchmark indices gaining over 17% from March lows, along with foreign inflow, encouraging global cues, and positive corporate earnings, contributed to the optimistic debut of Netweb Technologies on the stock exchanges.

Brokerages unanimously recommend subscribing to Netweb Technologies IPO, citing attractive valuations, robust financial performance, a prestigious customer base, long-standing customer relationships, and promising growth prospects. Nirmal Bang, in particular, draws a favorable comparison between Netweb and EMS (electronics manufacturing services) players, noting that Netweb demonstrates higher growth potential and superior return ratios while being offered at more affordable valuations.

Netweb Technologies plans to capitalize on its strong position in the rapidly expanding high-end computing solutions (HCS) sector by concentrating on the development of sophisticated and tailor-made computing systems tailored to meet the advanced computational needs of its clients, according to the brokerage.

As a result, Netweb achieved impressive EBITDA margins of 15.7 percent in FY23, compared to 14 percent previously, along with a remarkable return on capital employed (ROCE) of 52 percent in FY23.

Netweb Technologies achieved remarkable revenue growth at a compound annual growth rate (CAGR) of 77 percent during the period from FY21 to FY23. Furthermore, its profits and EBITDA recorded impressive CAGR figures of 139 percent and 121 percent, respectively, over the same period. The company also showed steady improvement in its PAT margin, rising from 5.8 percent in FY21 to 10.5 percent in FY23.

Maintaining a strong average return on equity of approximately 46 percent during FY21 to FY23, Netweb Technologies has demonstrated its financial stability and performance.

With the projected IT market in India expected to reach $372.7 billion by FY29, growing at a CAGR of 8.8 percent, the company is well-positioned to benefit from the industry’s growth opportunities. The PLI scheme and ‘China Plus One’ strategy are set to boost the IT sector further, providing additional avenues for growth.

The increasing adoption of high-end computing solutions like HPC, HCI, AI&EW, and data centre servers in various end-use industries, coupled with higher investments from both public and private players, is anticipated to drive the demand for technology solutions, offering promising prospects for Netweb Technologies.