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Salient features of the IPO:

• Netweb Technologies India Ltd. (NTIL), India’s leading high performance computing solution provider is coming up with an IPO to raise around Rs. 630cr, which opens on 17th Jul. and closes on 19th Jul. 2023. The price band is Rs. 475 - 500 per share.

• The IPO is a combination of fresh issue (Rs. 206cr) and OFS (Rs. 403.8 - 425cr). The company will not receive any proceeds from the OFS portion. From the fresh issue net proceeds, NTIL will be utilizing Rs. 128cr for funding the long-term working capital requirement, Rs. 32.3cr will be used to fund the proposed capital expenditure and Rs. 22.5cr will be utilized for the pre-payment/re-payment of certain borrowings. Residual funds will be used for general corporate purposes.

• On 30th Jun. 2023, the company has undertaken a pre-IPO placement of 0.102cr shares at Rs. 500 per shares. The total amount realized was Rs. 51cr. Consequently, the fresh issue size is lowered from Rs. 257cr, which was proposed during the filing of the DRHP.

• Some of the promoter & promoter group entities are partially offloading their stake in NTIL via the OFS route. Post-IPO, promoter & promoter group’s stake in the company will be at 75.45%, compared to 97.8% (pre- IPO). Accordingly, public shareholding will increase to 24.55% from pre- IPO levels of 2.2%.

Key competitive strengths:

• One of India’s leading Indian origin owned and controlled OEMs for HCS with integrated design and manufacturing capabilities • Long standing relationship with a marquee and diverse customer base

• Significant product development and innovation through R&D

• One of India’s leading HCS providers, which operates in a rapidly evolving and technologically advanced industry with high entry barriers

• Track record of financial performance and consistent growth

• Experienced board and senior management

Risk and concerns:

• General slowdown in the global economic activities
• Unfavorable government policies & regulations
• Difficulty in overseas expansion
• Rapid changing technological landscape
• Difficulty in maintaining the profitability
• Competition

Below are the key highlights of the company:

• Based on computation type, the Indian information technology (IT) market is segmented into high-performance computing (HPC) systems, workstations, other devices infrastructure, software, IT business services, and emerging-tech & telecom services. HPC systems have gained popularity over time due to their ability to handle large multi- dimensional datasets and solve complex problems at breakneck speeds by utilizing clusters of powerful processors. Workstations comprise of artificial intelligence (AI) and enterprise workstations. The Industrial internet-of-things, AI, engineering, drug discovery and healthcare, etc. are witnessing a higher application of HPC products & services and thus, all are anticipated to drive investments in the HPC market. India’s leading high-end computing solutions provider

• NTIL is one of India’s leading Indian origin owned and controlled original equipment manufacturer in the space of high-end computing solutions (HCS). The company provides supercomputing systems, private cloud & HCI (hyper-converged infrastructure), data center servers, AI systems & enterprise workstations and high-performance storage (HPS) solutions. These find application across sectors like IT, ITeS, entertainment & media, banking, financial services & insurance, national data centers and government entities like defence, education and research development institutions. It claims to have a 20-25% share in the domestic supercomputing market. In FY23, NTIL forayed into new product lines i.e. network switches and 5G ORAN appliances, which are critical to the data center market for enterprise IT and the telecommunication sector for enabling 5G services.

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