Netweb Technologies makes impressive debut; surges 91% post listing

Shares of Netweb Technologies made a blockbuster debut on the Dalal-Street on Thursday, with the share price of the high-end computing solutions provider listing at a premium of 89.4% at ₹947 per share on the NSE against the IPO price of ₹500 apiece. On the BSE, the Netweb Technologies stocks opened at ₹942.50 per share. 

Post listing, Netweb shares gained as much as 90.6% to hit a high of ₹953 on the BSE, while it touched a low of ₹875.60 during the first hour of trade so far. In a similar trend, the tech stock hit a high and low of ₹952.00 and ₹876.05, respectively, on the NSE. A combined 1.1 crore shares changed hands over the counter on the BSE and NSE, while the market capitalisation climbed to ₹5,018 crore.

The strong listing of the Delhi-based company was in line with Street expectations as the stock was commanding a premium of ₹390-400 over its issue price in the grey market, a day ahead of listing, signaling a stellar debut on the stock exchanges.  

The ₹631-crore initial public offering (IPO) of Netweb Technologies was subscribed 90.36 times, which comprised a fresh issue of equity shares worth ₹206 crore and an offer for sale (OFS) of ₹425 crore by existing shareholders. The issue, which opened between July 17-19, garnered highest-ever response from qualified institutional buyers (QIB), with the quota allotted to them subscribing by 228.91 times. The portion reserved for high net-worth individuals (HNIs) was booked 81.81 times, while that of retail investors employees subscribed 19.15 times and 53.13 times, respectively.

As per the data filed with SEBI, the company had reserved up to 50% of the issue for QIBs, 15% for non-institutional investors, and the balance 35% for retail individual investors.

The company plans to use IPO proceeds for funding capital expenditure (₹32.3cr); funding long-term working capital (₹128cr); repayment or pre-payment of the outstanding borrowings (₹22.5cr) and to meet general corporate purposes.

Ahead of the IPO, Netweb Technologies India raised ₹189 crore from 25 anchor investors by allocating 37.80 lakh equity shares at the upper end of the price band of ₹475-₹500 per share.

The overwhelming response to the IPO was attributed to its specialised focus on the high-end computing solutions (HCS) business, which has high entry barriers. As per a F&S report, the Indian supercomputing systems market is expected to grow from $539 million in fiscal 2023 to $919 million in fiscal 2029 at a CAGR of 9.3%.

Incorporated in 1999, Netweb Technologies is one of India’s largest manufacturers of Supercomputing systems, as per the F&S report. The company has designed, developed, and deployed some of India’s most powerful Supercomputing systems including AIRAWAT, and PARAM Ambar. It has both design and manufacturing capabilities in-house and has undertaken the installation of over 300 supercomputing systems and over 4,000 accelerator/GPU-based AI systems and enterprise workstations as of May 2023.

In FY23, the company’s revenue rose by 80% YoY to ₹445 crore, compared to ₹247 crore in the previous year. The profit doubled from ₹22.5 crore to ₹47 crore during the same period, while EBITDA margins expanded to 15.7% in FY23 from 10.1% in FY21.

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