Netweb Technologies lists at an 88% premium, beats grey market expectations

• Netweb Technologies listed at ₹942, with an 88% premium of its IPO price.
• The IPO was subscribed 90 times over the shares on offer.
• The company intends to use the net proceeds to fund capex, working capital, paying loans and general corporate purposes.
  

Netweb Technologies made its Dalal Street debut at ₹942, with an 88% premium, on Thursday. The grey market had been expecting it to list at a 75% premium over its IPO price of ₹500.

The Delhi-based company has raised ₹631 crore via the public offer. The IPO was subscribed 90 times over the shares on offer with a stellar response from Qualified Institutional Buyers (QIBs) as this portion was subscribed by a whopping 228.9 times.

The company intends to use the net proceeds from the fresh issue towards funding capital expenditure requirements, long-term working capital requirements, repayment or prepayment, in full or in part, of certain outstanding borrowings and general corporate purposes.

Source: BSE

About the company

Netweb Technologies with both design and manufacturing capabilities in-house, has installed over 300 supercomputing systems and over 4,000 accelerator/GPU based AI systems and enterprise workstations as of May 2023.

The company is an original equipment manufacturer (OEM) which is eligible for the government’s production linked incentives (PLI) scheme.

Intel Americas, Advanced Micro Devices, Inc., Samsung India Electronics, Nvidia Corporation are some of the companies it collaborates with.

“Between March 31, 2022 and May 31, 2023 it has almost doubled its order book value from ₹48.56 crore to ₹90.21 crore,” the company said in a press release.

Risk factors

The company said in its DRHP that a significant proportion of the orders are from government related entities which award the contract through a process of tender.

“Tenders, typically, are awarded to the lower bidder once all other eligibility criteria are met. The Company’s performance could be adversely affected if it is not able to successfully bid for these contracts or required to lower its bid value,” it added.

It had low-capacity utilisation in the last three fiscal years. Its success is also dependent on the long-term relationship with its customers and is heavily reliant on its top 10 customers.

Moreover, it does not generally enter into long-term contracts with customers, which exposes the company to risks emanating from the inability to retain the established customers as the clients.

“Loss of all or a substantial portion of sales to any of the top 10 customers, for any reason could have a material adverse impact on its business, results of operations, financial condition and cash flows,” the company said.