ICICI Securities initiates coverage on Netweb with 'Buy'; sees 28% upside

ICICI Securities has set a target price of ₹4,110 per share for NetwebTechnologies, implying an upside potential of 28 per cent from Friday's close

ICICI Securities has initiated coverage on Netweb Technologies Ltd. with a 'Buy' rating, highlighting that the stock is a unique and comprehensive play in the high-end computing solutions space (HCS). 

 

The brokerage has set a target price of ₹4,110 per share, implying an upside potential of 28 per cent from Friday's close.

 

Netweb is India's leading provider of HCS, with offerings across high-performance computing (HPC), private cloud and hyperconverged infrastructure, artificial intelligence (AI) systems and software and services, ICICI Securities said. HPC, private cloud and AI systems are the company’s fastest-growing segments, clocking a 77 per cent CAGR during FY22-25, it noted.

 

The brokerage highlighted Netweb's presence across both hardware and software, spanning design, manufacturing and software capabilities, which provides it a first-mover advantage in the domestic market. Sector tailwinds include rising domestic demand for computing and data centres, along with strong policy support through initiatives such as the IndiaAI Mission and the National Supercomputing Mission.  ALSO READ | Emkay sees Indian Ports set for "strong decade"; bets on Adani, JSW Infra 

ICICI Securities said Netweb's key strengths lie in being India’s only full-stack hardware provider, its marquee client base supported by government programmes, and strong partnerships with global OEMs such as Nvidia Inc., AMD and Intel. 

 

Notably, Netweb is Nvidia's only original equipment manufacturer partner in India, giving it early access to the latest chips and architectures, typically 12-24 months ahead, enabling faster design and deployment of advanced servers and AI systems, ICICI Securities said. 

 

The brokerage expects revenue and profit after tax CAGRs of 59 per cent and 58 per cent, respectively, over FY25-28. It has valued the stock at a 56 times price-to-earnings multiple on December 2027 earnings per share of ₹73, in line with Dixon Technologies' long-term average multiple.   ALSO READ | Amber Enterprises rises 3% in trade; Motilal Oswal, Nuvama retain 'Buy' 

On the policy front, ICICI Securities noted that large government outlays under the IndiaAI Mission and the National Supercomputing Mission, with allocations of ₹10,300 crore and ₹4,500 crore, respectively, are potential direct growth drivers for Netweb. Supportive regulations, such as the Digital Personal Data Protection Act and production-linked incentive schemes for IT hardware, further strengthen the operating environment.

 

However, the brokerage flagged the non-annuity nature of the business as a key risk. It also noted that AI-led benefits for IT services players have been limited over the past three years, with value capture skewed towards players higher up the hardware and systems value chain.