Netweb IPO opens today; Check GMP, other details. Should you apply?

Netweb Technologies IPO consists of a fresh issue of shares worth ₹206 crore and an offer-for-sale of up to 85 lakh shares by its existing promoters and shareholders.

The company has set the price band for the public issue at ₹475-500 per share. At the upper band price, the company expects to raise ₹631 crore through the IPO.

Post the public offer, Netweb Technologies shares will be listed on the stock exchanges BSE and NSE on July 27.

The lot size for the Netweb Technologies IPO is 30 shares and retail investors can apply up to 13 lots.

Also Read: Netweb Technologies IPO: Price band fixed at ₹475-500 per share; Check details here

Netweb Technologies India Ltd. specializes in High-end Computing Solutions (HCS) and serves various sectors, including IT, ITenabled services, entertainment, media, BFSI, national data centers, and government entities. 

The company operates a manufacturing facility in Faridabad, Haryana, and has 16 offices across India. NTIL’s 3 supercomputers have been listed among the world’s top 500 supercomputers 11 times.

The company has raised ₹51 crore  from pre-IPO placement at an issue price of ₹500 per share from marquee institutional investors, including LG Family Trust, and Anupama Kishore Patil, among others.

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

Also Read: Netweb Technologies to launch initial public offering on 17 July; 10 key pointers here

Netweb Technologies IPO GMP Today

Netweb Technologies IPO GMP today, or grey market premium today, is ₹365 per share, as per market observers. This means the shares of Netweb Technologies are trading at a premium of ₹365 a piece in the unlisted market.

Considering the IPO price and the GMP today, Netweb Technologies shares are expected to be listed at ₹865 apiece on the exchanges, which is at a premium of 73%.

Netweb Technologies IPO – Should you subscribe?

Most analysts have assigned a ‘Subscribe’ rating to the Netweb Technologies IPO given its business potential, earnings growth and reasonable valuations.

Geojit Financial Services

At the upper price band of ₹500, Netweb Technologies is available at a P/E of 59.7x (FY23), which appears reasonably priced compared to peers, Geojit Financial Services said.

“With effective management, consistent growth, an expanding product portfolio, geographic footprints and Digital India initiative by the Government, Netweb Technologies is well-positioned to capitalize on the Indian IT industry’s growth. Therefore, we assign a “Subscribe” rating for the issue on a short to medium-term basis,” it added.

Choice Broking

Choice Broking expects the company’s top-line over FY23-25 is likely to grow by 37% CAGR to ₹835.4 crore in FY25. Economies of scale operation would expand the EBITDA and PAT margin by 132 bps and 162 bps, respectively, to 17.1% and 12.2% in FY25E. 

“There are no comparable peers in the listed space having a business model and product offerings similar to Netweb Technologies. At the higher price band, it is demanding a P/E multiple of 59.7x (to its FY23 earning), which seems to be on the higher side. However, considering the business potential and earning growth in the medium term, we believe the demanded valuation is reasonable,” said Choice Broking.

Thus, it assigned a “Subscribe” rating for the issue.

Marwadi Shares and Finance

The brokerage firm assigned “Subscribe” rating to Netweb Technologies IPO as the company is one of India’s leading HCS providers, operating in a rapidly evolving and technologically advanced industry with high entry barriers. 

“This advantageous position is further reinforced by the company’s impressive track record of financial performance and consistent growth. Also it is available at a reasonable valuation compared to its peers,” the brokerage said.

Considering the FY23EPS of ₹8.37 on a post issue basis, the company is going to list at a P/E of 59.72x with a market cap of ₹28,032 million whereas its peers Syrma SGS Technology, Kaynes Technology India Ltd and Dixon Technologies Ltd are trading at a P/E of 72x,106x,101x, Marwadi Shares and Finance noted.

Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 17 Jul 2023, 09:00 AM IST