Netweb Technologies, a provider of high-end computing solutions, is anticipated to deliver impressive results on its listing day, July 27. This can be attributed to strong subscription numbers during the IPO, healthy financials with improved operating margins, and its specialized focus on the niche business segment of high-end computing solutions. According to analysts, the expected listing price may command a premium of 70-85 percent over the issue price of Rs 500 per share.
On top of that, the strong equity market conditions backed by FII inflow also supported sentiment in the primary market.
The initial public offering of Netweb Technologies was subscribed 90.36 times during July 17-19, with qualified institutional buyers (QIB) being at the forefront. We have seen the highest-ever response from QIBs who have bought 228.91 times the allotted quota.
The portion set aside for high net-worth individuals was subscribed 81.81 times, that of retail investors 19.15 times and employees 53.13 times.
"With Netweb Technologies IPO being subscribed 90 times, we expect a strong listing of the issue on the bourses tomorrow. The shares are likely to list upwards of 70 percent premium over the issue price of Rs 500 per share," Dhruv Mudaraddi, research analyst at StoxBox said.
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The strong response can be credited to the company's specialized focus on the high-end computing solutions (HCS) business, which has high entry barriers. The company's emphasis on research and development to enhance its product portfolio and expanding its presence in existing verticals has also contributed to the positive reception.
Moreover, the company has almost seen a 3-fold rise in revenues and a nearly 6-fold jump in profitability during FY21-23 period, with a consistent improvement in margin profile.
The company has a long-standing relationship with a marquee and diverse customer base. Over the years, it has expanded its user base to several sectors including information technology, information technology-enabled services, entertainment and media, banking, financial services and insurance (BFSI), national data centres and government entities.
It has also forayed into new product lines - network switches and 5G ORAN appliances which are critical to the data center industry for enterprise IT and the telecommunication industry for enabling 5G services.
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Netweb IPO shares traded with a 75-80 percent premium in the grey market, based on the strong demand for IPO, analysts said. The grey market is an unofficial market where IPO shares can be bought and sold till the listing.
Generally, investors look at grey market premiums to know the possible listing price.
"The grey market premium suggests that the listing price could be around Rs 894, which is around 78 percent higher than the IPO price of Rs 500 per share," Anubhuti Mishra, equity research analyst at Swastika Investmart said.
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She further said such a premium was justified because Netweb is a leading provider of high-end computing solutions in India. The company has a strong order book which has increased from Rs 48.56 crore in FY21 to Rs 90.2 crore in FY23.
Netweb Technologies is well-positioned to benefit from the growth of the high-end computing market in India, she believes.
Astha Jain, Senior Research Analyst at Hem Securities is also expecting a robust listing of Netweb at an 85 percent premium to the issue price.
Netweb Technologies raised Rs 631 crore via public issue last week. The price band for the offer was Rs 475-500 per share.
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