Netweb Tech IPO subscribed 4.4x on day 2 so far; NIIs, retailers drive demand

The initial public offering (IPO) of Netweb Technologies India continued to receive strong response from investors during the second day of the bidding process. The issue was subscribed more than 4.4 times on Tuesday so far.

The Rs 631-crore IPO of Netweb Technologies is being sold in the range of Rs 475-500 apiece with a lot size of 30 equity shares and its multiples thereafter. The three-day stake sale kicked off for subscription on Monday and will conclude on Wednesday.

According to the data from the BSE, the investors made bids for 3,90,38,490 equity shares, or 4.41 times compared to the 88,58,630 equity shares offered for the subscription by 12.20 pm on Tuesday, July 18, 2023. The bidding was led by retail investors and employees.

The allocation for non-institutional bidders (NIIs) fetched 7.46 times, whereas the quota for retail investors was booked 5.44 times. The portion for employees was subscribed 11.12 times, while qualified institutional bidders' allocation was subscribed merely three per cent.

Incorporated in 1999, Netweb Technologies provides high-end computing solutions (HCS), offering high-performance computing (supercomputing/HPC) systems; private cloud and hyper-converged infrastructure (HCI); AI systems and enterprise workstations; high-performance storage solutions; data center servers, software and services.

Majority of the brokerage firms tracking the issue continue to remain positive on the issue citing its strong business fundamentals, robust balance sheet, niche business segment and reasonable valuations compared to the peers. Most of them have suggested a bid for the issue.

"At the IPO price of Rs 500, Netweb Technologies India is valued at P/E of 59.9 times. Considering the growth opportunities in the company, strong fundamentals, and robust product portfolio we recommend a 'subscribe' rating," said Ventura Securities.

Ahead of its IPO, Netweb Technologies collected Rs 189 crore by allocating 37.8 lakh equity shares at Rs 500 per share from 25 anchor investors on Friday, according to a BSE circular. Nomura Funds, Goldman Sachs Funds, ICICI Prudential Mutual Fund (MF), HDFC MF, WhiteOak MF and Nippon MF, among others participated in the anchor round.

Netweb Technologies' IPO appears to be reasonably priced compared to peers. With effective management, consistent growth, an expanding product portfolio, geographic footprints and digital India initiative by the Government, It is well-positioned to capitalize on the Indian IT industry's growth, said Geojit Financial Services with a 'subscribe' rating.

The company has reserved 50 per cent of offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the allocations. Remaining 35 per cent of the portion of the offer shall be allocated to the retail bidders.

The company has no preference for peers listed in India. Its future prospects look promising given the space it operates. We believe the IPO is priced effectively given its unique proposition, said Indsec Securities and Finance with a 'subscribe' rating for the issue.

Equirus Capital and IIFL Securities are to book-running lead managers to the issue, while Link Intime India has been appointed as the registrar to the issue. Shares of Netweb Technologies will be listed at both BSE and NSE.


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