Netweb Technologies India shares surge over 80% on stock market debut

Shares of Netweb Technologies India, a high-end computing solutions (HCS) provider, surged more than 80 per cent during their trading debut on Thursday. The stock rose Rs 412, or 82.4 per cent over its issue price to finish at Rs 912 on the NSE, where Rs 1,575 crore worth of shares got traded. The stellar listing follows robust demand for Netweb’s maiden share sale, which had more than 90 times subscription and generated bids worth Rs 40,000 crore. At IPO price of Rs 500 , the company's shares were valued at nearly 60 times its FY23 earnings. Analysts had said the valuation was attractive given companies such as Kaynes Technologies and Dixon Technologies trade at multiples of more than 100x. 

The Delhi-based firm is now valued at Rs 5,113 crore, nearly 110x its FY23 net profit of Rs 47 crore. However, the company’s profits have grown at an annualised rate of 2.4 times between FY21 and FY23.

“The IT market in India is forecasted to reach $372.7 billion by FY29 with a CAGR of 8.8 per cent. The PLI scheme and ‘China Plus One’ strategy will further boost the IT sector which will provide growth opportunities to the company. Moreover, high-end computing solutions are expected to witness growth leading to increased adoption of technology in various end-use industries in addition to increased investment by public and private players in these solutions,” Reliance Securities had said in an IPO note on Netweb, recommending its clients to subscribe to the issue citing “strong in-house capabilities, healthy financials, foray into new product-lines, multiple enduser industries and marquee customers and strong growth prospects.”

In the IPO, Netweb issued fresh shares worth Rs 206 crore, which it will utilise for funding capital expenditure requirements, which includes building a surface mount technology (SMT) line.