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Investment Rationale

India’s Leading HCS provider: The company is one of India’s leading HCS provider, with fully integrated design and manufacturing capabilities It continues to operate in a rapidly evolving and technologically advanced industry with high entry barriers. In the HPC segment, it has been successful in building Supercomputers like PARAM Ambar which is deployed at ISRO. This enhances their expertise and gives them a good stead in the market. The company provides the complete hardware stack, middleware and application porting in migration services leading to no dependence on third-party organizations.

Expand geographic footprint in EMEA: The company caters to many Indian multinational companies. It now aims to expand and grow their global presence in EMEA by offering 5G products and solutions. The 5G market in European and African countries is expected to grow at a CAGR of 45.7% between FY23 and FY29. These new networks are aiding in the transformation of business and manufacturing in addition to enabling cutting-edge new consumer services and fostering economic growth. The revenue from operations in foreign currency for FY23 stood at INR 4.63 Mn whereas the capital expenditure in foreign currency was INR 4.42 Mn.

Significant product development and innovation through R&D: The industry in which the company operates is R&D intensive and relies significantly on technically qualified resources. The company’s R&D team’s in-depth understanding of high-end computing solutions enable them to stay at the forefront of technological evolution and anticipate and envision the future needs of the market. Its R&D Facilities have enabled them to increase their product lines. The company also specializes in independent designing and innovation of new products and solutions offerings and provide services tailored to specific customer requirements.

Long-standing relationships with Customers: During FY23, the company catered to 2,011 customers out of which 317 were repeat customers. Repeat Customers contributed INR 3,999 Mn or 90.68% of the revenue from operations.

Comprehensive Product Segments: The company's revenue comprises six distinct product segments: Supercomputers & High-Performance Computing, Private Cloud, AI systems, PS solutions, Data Centre Servers, and Software & Services. A comparative analysis reveals that none of the global OEMs possess all six product lines within their offerings. The company differentiates itself by providing a comprehensive suite of hardware stack, middleware, and application porting in migration services, thereby eliminating reliance on third-party organizations. Additionally, the company aims to enhance its product portfolio by introducing 5G and private 5G solutions.

Valuation and View :

Netweb Technologies has demonstrated exceptional performance in the FY23 and has positioned itself strongly among its peers. It is one of the few players in India that provides a comprehensive range of high-performance computing products and solutions. Over the past three years, repeat customers have contributed approximately 85% of the company's revenue. With its presence in government, defense, higher education, and research sectors, Netweb Technologies is well- positioned for future growth. The company also has ambitions to expand its product portfolios and manufacturing facilities in order to establish a global presence. With a PE of 59.7x at the upper band of INR 500. we recommend that investors Subscribe to the issue for the long term.

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