Netweb Tech IPO subscribed 85% in first few hours of bidding; retail book sails through

The initial public offering (IPO) of Netweb Technologies India received a strong response from investors during the initial few hours of bidding on the first day of the issue. Retailers, non-institutional investors and employee investors were the leaders in the bidding war.

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 74,96,400 equity shares, or 0.85 per cent compared to the 88,58,630 equity shares offered for the subscription by 12.35 pm on Monday, July 15, 2023. The bidding was led by retail investors and employees.

The quota for retail investors was booked 1.25 times, whereas the allocation for non-institutional bidders (NIIs) fetched 95 per cent bids. The portion for employees was subscribed 3.45 times, while qualified institutional bidders' allocation was subscribed merely one 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, softwares 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.

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, we recommend a 'subscribe' to the issue, said Reliance Securities in its IPO note.

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 is able to generate high EBITDA margins and ROCE. There are no directly comparable peers in the listed space who are present in the HCS industry. Thus, we compare Netweb with EMS players who are mainly into manufacturing of electronic components and are also supported by strong growth due to favorable industry tailwinds, said Nirmal Bang with a 'subscribe' tag.

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 experienced board and senior management with track record of financial performance and consistent growth, Hence looking after all this, we believe that company is well poised to cater opportunities present in the sector, and therefore we recommend to 'subscribe' the issue, said Hem Securities in its IPO note.

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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