The maiden public issue of Netweb Technologies continued to receive good response from investors on its second day of bidding on July 18, as the offer was subscribed 9.14 times. Bids for 8.09 crore equity shares have been received against an IPO size of 88.58 lakh equity shares.
High net-worth individuals and retail investors remain at the leading position while supporting the issue, subscribing 18.09 times and 8.77 times, respectively.
Employees, who are going to receive up to 20,000 equity shares out of the total issue size, have bought 16.58 times the allotted quota. They will get shares at a discount of Rs 25 per share to the final offer price.
The portion set aside for qualified institutional buyers, who have 50 percent reservation in the issue size, has been subscribed 2.66 times. Up to 15 percent of the offer is reserved for high networth individuals and 35 percent for retail investors.
The initial public offering was subscribed 2.33 times on its first day of bidding on July 17.
Marquee investors
The high-end computing solutions provider aims to mobilise Rs 631 crore from the public issue, out of which Rs 189 crore was raised from anchor investors on July 14, a day ahead of offer opening.
The IPO comprises fresh issuance of shares worth Rs 206 crore, and an offer-for-sale of Rs 425 crore by promoters. The price band for the offer has been fixed at Rs 475-500 per share. Eastspring Investments India Fund, Nomura Funds, Motilal Oswal MF, Franklin Templeton, Goldman Sachs Funds, and HDFC Mutual Fund were among the marquee investors putting in money in the anchor book.
Most of brokerages have given a 'subscribe' rating to the issue, given its attractive pricing, long-term relationship with customers, and healthy financials with strong growth prospects.
Netweb Technologies manufactures and deploys high-end computing solutions (HCS) comprising proprietary middleware solutions, end-user utilities, and precompiled application stack. Two of the company's supercomputers have been listed 10 times in the world's top 500 supercomputers.
Also read: Netweb Technologies IPO: 10 things to know before you buy it
"The company has a long-standing relationship with a marquee and diverse customer base. Though the issue appears lucratively priced based on FY23 performance. Management’s sound understanding of the HCS segment, experienced board and senior management and significant product development to drive growth," Asit C Mehta Investment Intermediates said.
At the upper price band of Rs 500 per share, the stock is priced at 55.12 times its FY23 EPS. The brokerage recommended subscribing to the issue from a long-term perspective.
In view of strong in-house capabilities, healthy financials, foray into new product-lines, multiple end-user industries, and marquee customers and strong growth prospects, Reliance Securities also recommended subscribing to the issue.
The financials
The company's revenue registered a CAGR of 77 percent during FY21-FY23, while profit and EBITDA averaged 139 percent and 121 percent growth in this period.
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The IT market in India is forecast to be $225 billion in FY23 and is expected to reach $372.7 billion by FY29 at a CAGR of 8.8 percent. "The PLI scheme and ‘China Plus One’ strategy will further boost the IT sector which will provide growth opportunities to the company," Reliance Securities said.
Moreover, high-end computing solutions such as HPC, HCI, AI&EW, and data centre servers are expected to see growth on the back of increased adoption of technology in various end-use industries, in addition to increased investment by public and private players in these solutions, the brokerage added.
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