Netweb Technologies to launch IPO today: 10 things to know before you buy it
Netweb Technologies, a Delhi-based high-end computing solutions (HCS) provider, is planning to launch its initial public offering (IPO) on July 17. The company aims to raise Rs 631 crore through the IPO. This includes fresh equity of Rs 206 crore and an offer for the sale of 8.5 million shares, amounting to Rs 425 crore at the higher end of the price band. The price band for the IPO has been set at Rs 475-500 per share.
Prior to the IPO, Netweb Technologies conducted a pre-IPO placement, where they issued 1,020,000 equity shares at a price of Rs 500 per share (with a face value of Rs 2), totaling Rs 51 crore. This placement allowed the company to raise capital before the IPO from select investors.
The lead book runners for Netweb Technologies’ IPO are Equirus Capital and IIFL Securities. They are responsible for managing the IPO process, including underwriting, pricing, and marketing the shares to potential investors.
Overall, Netweb Technologies’ IPO is expected to raise significant capital for the company, which can be used for business expansion, research and development, acquisitions, and other corporate purposes.
About the company
Netweb Technologies is a prominent original equipment manufacturer (OEM) in India, specializing in high-end computing solutions. The company offers a range of advanced technologies and products in various segments, including:
1. Supercomputing Systems: Netweb Technologies provides cutting-edge supercomputing systems that deliver exceptional computational power and performance. These systems are typically used in scientific research, weather forecasting, computational fluid dynamics, and other data-intensive applications that require high-speed processing.
2. Private Cloud and Hyperconverged Infrastructure (HCI): The company offers private cloud solutions, enabling organizations to build secure and scalable cloud environments within their own infrastructure. Netweb Technologies also specializes in hyperconverged infrastructure, which integrates computing, storage, networking, and virtualization into a single system, simplifying management and improving resource utilization.
3. Data Centre Servers: Netweb Technologies provides robust and reliable servers for data centers. These servers are designed to handle heavy workloads, ensuring efficient processing and storage of data. They are suitable for organizations with demanding computational requirements, such as large enterprises, research institutions, and government agencies.
4. AI Systems: Netweb Technologies offers artificial intelligence (AI) systems that empower businesses to harness the potential of AI technologies. These systems are optimized for machine learning and deep learning tasks, enabling organizations to develop and deploy AI applications for various use cases, including image recognition, natural language processing, and predictive analytics.
5. Enterprise Workstations: The company delivers high-performance workstations tailored for professional use. These workstations are equipped with powerful processors, ample memory, and advanced graphics capabilities, catering to the needs of engineers, designers, content creators, and other professionals who require high computational power for their work.
6. High-Performance Storage (HPS) Solutions: Netweb Technologies provides storage solutions designed to handle massive amounts of data and deliver high throughput and low latency. These solutions are ideal for organizations dealing with large-scale data processing, such as financial institutions, research labs, and media companies.
Through its comprehensive portfolio of high-end computing solutions, Netweb Technologies has established itself as a leader in the field. The company’s offerings cater to diverse industries, including research and development, academia, government, finance, healthcare, and media, empowering organizations to leverage advanced technologies for enhanced productivity and performance.
The remaining 7 percent of Netweb Technologies’ revenue is generated from various sources, including but not limited to:
1. Maintenance and Support Services: Netweb Technologies provides maintenance and support services for its high-end computing solutions. These services ensure that the systems and infrastructure deployed by clients are operating optimally, and any technical issues or downtime are promptly addressed. Revenue from these services contributes to the overall revenue mix.
2. Consulting and Professional Services: The company offers consulting and professional services to assist clients in designing, implementing, and optimizing their high-end computing solutions. This includes assessing their requirements, providing customized solutions, and offering expertise in system integration and deployment. Revenue from these consulting and professional services adds to the company’s revenue stream.
3. System Upgrades and Expansion: As technology advances and client needs evolve, there is a demand for upgrading existing systems or expanding the computing infrastructure. Netweb Technologies offers services and solutions for system upgrades, scalability, and expansion, enabling clients to enhance their computing capabilities. Revenue generated from these upgrade and expansion projects contributes to the overall revenue mix.
4. Training and Education: Netweb Technologies may also provide training and education services to its clients. This can include technical training on the operation, maintenance, and optimization of the high-end computing solutions they offer. Revenue from training and education initiatives adds to the company’s revenue diversification.
5. Other Products and Services: The company may have additional products and services that fall outside the specific categories mentioned earlier. These could include specialized software applications, peripheral devices, or other value-added offerings that complement their high-end computing solutions. Revenue generated from these additional products and services accounts for a portion of the remaining 7 percent.
It’s important to note that the revenue breakdown provided is based on the given percentages, and actual revenue distribution may vary over time depending on market conditions, customer demands, and the company’s strategic focus.
Selling shareholders
In the Netweb Technologies IPO, the selling shareholders include the promoters of the company, namely Sanjay Lodha, Navin Lodha, Vivek Lodha, Niraj Lodha, and Ashoka Bajaj Automobiles LLP.
1. Sanjay Lodha: Sanjay Lodha is one of the promoters of Netweb Technologies. As a promoter, he has played a key role in the company’s growth and strategic direction. His involvement in the IPO indicates his decision to sell a portion of his shareholding in the company.
2. Navin Lodha: Navin Lodha is another promoter of Netweb Technologies. He has likely contributed to the company’s development and success. By participating in the IPO as a selling shareholder, he will sell a portion of his shares in the company.
3. Vivek Lodha: Vivek Lodha is a promoter of Netweb Technologies and has likely played a significant role in the company’s operations and growth. As a selling shareholder, he will sell a portion of his stake in the IPO.
4. Niraj Lodha: Niraj Lodha, as a promoter, has likely been actively involved in the operations and management of Netweb Technologies. As a selling shareholder, he will also sell a portion of his shares in the IPO.
5. Ashoka Bajaj Automobiles LLP: Ashoka Bajaj Automobiles LLP is a selling shareholder in the Netweb Technologies IPO. LLP stands for Limited Liability Partnership, which indicates that it is a legal entity where the partners have limited liability. The involvement of Ashoka Bajaj Automobiles LLP as a selling shareholder suggests that it holds a stake in Netweb Technologies and has decided to sell some of its shares through the IPO.
The decision of the promoters and Ashoka Bajaj Automobiles LLP to sell a portion of their shares through the IPO provides them an opportunity to realize some of their investments and potentially diversify their holdings. It also allows them to provide liquidity to the market and potentially attract new investors to the company.
Objective of the offer:
Netweb Technologies has outlined the allocation of funds raised from the IPO for various purposes:
1. Long-Term Working Capital Requirement: The company plans to allocate Rs 128 crore towards funding its long-term working capital requirements. This capital will be utilized to support the company’s ongoing operations, meet day-to-day expenses, and ensure smooth business continuity.
2. Purchase of Equipment/Machinery for SMT Production Line: Netweb Technologies intends to utilize Rs 23.2 crore for the purchase of equipment and machinery related to its new Surface Mount Technology (SMT) production line. SMT is a method of electronic circuit board assembly that utilizes automated equipment. This investment will help the company enhance its production capabilities and meet the growing demand for its products.
3. Repayment of Outstanding Borrowings: A portion of the funds, amounting to Rs 22.5 crore, will be used to repay certain outstanding borrowings. This allocation aims to reduce the company’s debt burden and improve its financial position.
4. Construction of SMT Line Building and Interior Development: Netweb Technologies plans to spend Rs 9 crore on constructing the building for the SMT production line and on interior development. This investment will ensure the infrastructure is in place to support the new production line, providing a suitable environment for efficient operations.
These allocations demonstrate the company’s strategic focus on strengthening its working capital, expanding production capabilities, and improving its financial structure. By funding its long-term working capital requirements, investing in equipment and machinery, repaying debt, and enhancing infrastructure, Netweb Technologies aims to position itself for sustainable growth and meet the evolving needs of its customers in the high-end computing solutions market.
Financials:
Netweb Technologies has achieved remarkable revenue growth with a compounded annual growth rate (CAGR) of 75 percent from FY21 to FY23. During the same period, the company’s profits have also witnessed substantial growth, with a CAGR of approximately 138 percent. Additionally, the company has experienced an improvement in its margins, which have increased from 11 percent to 15 percent.
Netweb Technology vs peers
Netweb Technologies does not have any exact listed peers for comparison in the Indian or international markets. However, according to Axis Securities, there are some companies in the electronic manufacturing system (EMS) business that can be considered as somewhat comparable. These companies include Syrma SGS Technology, Kaynes Technology, Dixon Technologies, and others. While these companies are not directly comparable to Netweb Technologies, they operate within a similar industry and can provide some insights for analysis and comparison purposes.
Valuation: Netweb vs peers
Netweb Technologies’ valuation is in line with Syrma SGS and Kaynes Technology, comparable companies in the electronic manufacturing system (EMS) business. However, it is significantly lower than the market leader, Dixon Technologies, indicating Dixon’s stronger market position and potentially higher growth prospects.
