Netweb Technologies lists at 89% premium over issue price

Shares got listed at Rs 947, a 89 per cent premium over its issue price of Rs 500 per share on the National Stock Exchange on Thursday.

Netweb Technologies India (Netweb) made a stellar market debut, with its shares listed at Rs 947, a 89 per cent premium over its issue price of Rs 500 per share on the National Stock Exchange (NSE) on Thursday. On the BSE, the stock listed at Rs 942.50 per share.

Post listing, the stock hit a high of Rs 953 on the BSE and Rs 952 on the NSE. At 10:12 AM; the stock quoted at Rs 913.70, up 83 per cent when compared to its issue price. A combined around 8.4 million shares had changed hands on the NSE and BSE.

The Rs 631 crore initial public offering (IPO) garnered more than 90 times subscription, generating bids worth Rs 40,000 crore. The qualified institutional buyer (QIB) portion of the issue was subscribed a record 221 times, while retail and high networth individual (HNI) portions were subscribed 19.5 times and 83.2 times, respectively.

The IPO consisted of a fresh fund raise of Rs 206 crore and an offer-for-sale of Rs 425 crore. Netweb plans to use the IPO proceeds for funding capital expenditure requirements, which includes building a surface mount technology (SMT) line. 

Netweb provides high-end computing solutions (HCS). It offers high-performance computing (supercomputing/HPC) systems; private cloud and hyper-converged infrastructure (HCI); AI systems and enterprise workstations; high-performance storage (HPS/enterprise storage system) solutions; data center servers, softwares and services.

Netweb caters to several marquee customers across various end-user industries such as information technology, information technology-enabled services, entertainment and media, banking, financial services and insurance (BFSI), national data centres and government entities including in the defence sector.

Netweb intends to leverage its presence in the fast growing HCS industry with focus on developing refined, customised computing systems to address the high-end computational requirements of customers. Netweb is thus able to generate high EBITDA margins and ROCE. There are no directly comparable peers in the listed space who are present in the HCS industry.

Analysts at Nirmal Bang Securities believe, Netweb possesses higher growth and return ratios compared to EMS players and is also available at cheaper valuations at IPO price.

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, such as HPC, HCI, AI&EW, data centre servers etc., 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, according to analyst at Reliance Securities.

In view of strong in-house capabilities, healthy financials, foray into new product-lines, multiple enduser industries and marquee customers and strong growth prospects, the brokerage firm had recommended a ‘SUBSCRIBE’ rating to the issue.