Netweb Tech IPO subscribed over 26x on day 3 so far; NIIs quota booked 52 times

The initial public offering (IPO) of Netweb Technologies India continued to receive strong response from investors on the third and last day of the bidding process. The issue was subscribed more than 2.33 times on day one which it was subscribed more than 9.23 times by the end of second day of the bidding.

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 23,13,98,040 equity shares, or 26.12 times compared to the 88,58,630 equity shares offered for the subscription by 1.20 pm on Wednesday, July 19, 2023. All categories of investors were going all guns blazing for the issue.

The allocation for non-institutional bidders (NIIs) fetched 52.38 times, whereas the quota for qualified institutional bidders was booked 27.30 times. The portion for employees was subscribed 35.11 times, while allocation for retail investors was subscribed 14.25 times.

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.

Hensex Securities has suggested to apply for listing gains as well as for long-term investment citing its strong financial performance, lower debt levels. The company has planned to open a manufacturing facility in Faridabad, this will be done In order to manufacture our products, without any reliance on any third-party entity, it said.

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.

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. We believe, Netweb possesses higher growth and return ratios compared to EMS players and is also available at cheaper valuation, said Nirmal Bang Securities 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.

Netweb Tech is one of India’s leading Indian-origin-owned and controlled OEM for HCS with integrated design and manufacturing capabilities. The Company also has a long-standing relationship with a marquee and diverse customer base, said Asit C Mehta Investment Intermediates.

"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. We recommend subscribing to the issue from a long-term perspective," it added.

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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