• Price Band of ₹475 – ₹500 per equity share bearing face value of ₹2 each (“Equity Shares”)
• Bid/Offer Opening Date – Monday, July 17, 2023 and Bid/Offer Closing Date – Wednesday, July 19, 2023.
• Minimum Bid Lot is 30 Equity Shares and in multiples of 30 Equity Shares thereafter.
• The Floor Price is 237.50 times the face value of the Equity Share and the Cap Price is 250 times the face value of the Equity Share.
• The Price to Earnings Ratio for Fiscal 2023 based on Diluted EPS at the Floor Price is 52.37 times and at the Cap Price is 55.13 times.
Risks to Investors:
Business Risk:
• A significant proportion of the orders are from government related entities which award the contract through a process of tender. Tenders, typically, are awarded to the lower bidder once all other eligibility criteria are met. The Company’s performance could be adversely affected if it is not able to successfully bid for these contracts or required to lower its bid value.
Particulars Revenue from operations (%)
Fiscal 2023* Fiscal 2022 Fiscal 2021
Government Customers 53.19 61.84 46.57
Non-Government Customers 46.81 38.16 53.43
Total 100.00 100.00 100.00
*Revenue from operations excludes Other operating revenue.
• The Company has low-capacity utilisation in Fiscals 2023, 2022 and 2021. The capacity utilisation for Fiscal 2023, 2022 and 2021 of the facility are 51.64%, 53.11% and 52.01% respectively.
Concentration risk:
• The Company’s success is dependent on the long-term relationship with its Customers. In particular, the Company is heavily reliant on its top 10 Customers. The Company does not, generally, enter into long term contracts with Customers, which exposes the company to risks emanating from the inability to retain the established Customers as the clients.
Particulars Revenue Contribution (%)
Fiscal 2023* Fiscal 2022 Fiscal 2021
Top 10 customers 57.80 49.47 52.26
*Revenue from operations excludes Other operating revenue.
Loss of all or a substantial portion of sales to any of the top 10 Customers, for any reason could have a material adverse impact on the Company’s business, results of operations, financial condition and cash flows.
• The Company derives a majority portion of the revenues from operations from a select few of the HCS offerings. Loss or decline in the demand of such offerings may result in an adverse effect on the business, revenue from manufacturing operations and financial condition.
Business Verticals Revenue from operations (%)*
Fiscal 2023 Fiscal 2022 Fiscal 2021
Supercomputing systems 39.19 41.70 9.72
Private cloud and HCI 33.13 19.38 28.39
Total 72.32 61.08 38.11
*Revenue from operations excludes Other operating revenue
Other Risk:
• The companies disclosed as peer set of the Company in the ‘Basis for Offer Price’ section are not in the same line of business as that of the Company i.e providing HCS offering. There is no direct comparison with these listed peers. Therefore, investors must rely on their own examinations of accounting ratios of the Company for the purposes of investment in this Offer.
• While the Promoters and Whole Time Directors of the Company possess educational qualifications in management and commerce, they do not possess educational qualifications in the field of information technology. The Company’s future success will depend, on among other factors, the ability of the Company to evolve with the changing landscape of the business verticals in which the Company operate.
• The Weighted Average Cost of acquisition of all Equity Shares transacted in last three years, 18 months and one year preceding the date of the RHP:
Period Weighted Average Cost of Acquisition (in ₹) Upper End of the Price Band (₹ 500) is 'X' times the Weighted Average Cost
of Acquisition Range of Acquisition Lowest Price - Highest Price (in ₹)
Last 1 year 14.84 33.69 0-500
Last 18 Months 14.84 33.69 0-500
Last 3 years 13.77 36.31 0-500
As certified by M/s APT & Co LLP, the Independent Chartered Accountant, vide their certificate dated July 10, 2023
Weighted average cost of acquisition compared to Floor Price and Cap Price:
Past Transactions Weighted Average Cost of
Acquisition (in ₹) Floor price of
₹475 Cap price of ₹500
Past 5 primary issuances /secondary transactions 445.42 1.07
times 1.12
times
As certified by the Statutory Auditors, S S Kothari & Company, pursuant to a certificate dated July 10, 2023.
• Average cost of acquisition of Equity Shares for the selling shareholders namely, Sanjay Lodha is ₹ 0.43, Navin Lodha is ₹0.11, Vivek Lodha is ₹0.35, Niraj Lodha is ₹0.84 and Ashoka Bajaj Automobiles LLP (formerly known as Ashoka Bajaj Automobiles Private Limited) is ₹1.56 and Offer Price at upper end of the Price Band is ₹ 500 per Equity Share.
• The Price/Earnings ratio based on diluted EPS for fiscal 2023 for the Company at upper end of the price band is 55.13 times and Price/Earnings ratio of the average industry peer group as on the date of the RHP is 79.82 times.
• Weighted Average Return on Net Worth for Fiscals 2023, 2022 and 2021 is 64.35%.
• The market capitalization of the Company at the lower end and higher end of price band to total income for fiscal 2023 is 6.00 times and 6.29 times respectively.
• The two BRLMs associated with the Offer have handled 40 public issues in the past three Fiscal Years, out of which 13 issue closed below the Offer price on the listing date
Name of the BRLM Total Issues Issues closed below IPO price on listing date
Equirus Capital Private Limited* 8 3
IIFL Securities Limited* 31 10
Common Issues of above BRLMs 2 Nil
Total 41 13
*Issues handled where there were no common BRLMs
Mumbai, July 17, 2023: Delhi-NCR-based Netweb Technologies India Ltd (Netweb Technologies) one of country’s leading high-end computing solutions (HCS) provider, with fully integrated design and manufacturing capabilities (Source: F&S Report) has fixed the price band at ₹475 to ₹500 per Equity Share for its initial public offering of equity shares (“IPO” or “Offer”). The IPO will open on Monday, July 17, 2023, for subscription and closes on Wednesday, July 19, 2023. Investors can bid for a minimum of 30 Equity Shares and in multiples of 30 Equity Shares thereafter.
Netweb Technologies is compliant with the ‘Make in India’ Policy of the Government and is one of the few OEMs in the country eligible to seek production linked incentives schemes of the Government of India for IT Hardware for manufacture of servers, and Telecom and Networking Products Manufacturing in India for the manufacture of networking and telecom products (Source: F&S Report).
Netweb Technologies has both design and manufacturing capabilities inhouse and have undertaken installation of over 300 supercomputing systems and over 4000 accelerator / GPU based AI systems and enterprise workstations as of May 2023. Intel Americas, Inc., Advanced Micro Devices, Inc., Samsung India Electronics Private Limited, Nvidia Corporation are some of the companies it collaborates with to design and innovate product offerings.
It is a high-end computing solutions (HCS) provider based in India catering to many Indian and multinational Customers based in India and is planning to grow its geographical footprint in Europe, Middle East and Africa.
Between March 31, 2022 and May 31, 2023 it has almost doubled its order book value from Rs. 48.56 crore to Rs. 90.21 crore.
In case of any revision to the Price Band, the Bid/Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, the Company may, in consultation with the Book Running Lead Managers, for reasons to be recorded in writing, extend the Bid / Offer Period for a minimum of three Working Days, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges, by issuing a public notice, and also by indicating the change on the website of the Book Running Lead Manager and at the terminals of the Syndicate Member(s) and by intimation to the Designated Intermediaries and the Sponsor Bank, as applicable.
The Offer is being made through the Book Building Process, wherein not more than 50% of the Net Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Net Offer shall be available for allocation to Non-Institutional Bidders and not more than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders. The Offer also includes an Employee Reservation Portion of up to 20,000 Equity Shares.
Equirus Capital Private Limited and IIFL Securities Limited are the book running lead managers, while Link Intime India Private Limited is the registrar to the offer.
Disclaimers: NETWEB TECHNOLOGIES INDIA LIMITED is proposing, subject to applicable statutory and regulatory requirements, receipt of requisite approvals, market conditions and other considerations, to undertake an initial public offer of its Equity Shares and has filed the RHP with the Registrar of Companies, National Capital Territory of Delhi and Haryana at Delhi. The RHP is available on the website of SEBI at www.sebi.gov.in as well as on the websites of the Book Running Lead Managers, Equirus Capital Private Limited at www.equirus.com, and IIFL Securities Limited at www.iiflcap.com. Potential investors should note that investment in equity shares involves a high degree of risk and for details relating to such risk, please see the section titled “Risk Factors” on page 36 of the RHP. Potential investors should not rely on the draft red herring prospectus of the Company dated March 28, 2023 read with the corrigendum dated May 15, 2023 and the addendum dated July 4, 2023 filed with SEBI for making any investment decision.
This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the U.S. Securities Act or an exemption from such registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or the selling security holder and that will contain detailed information about the company and management, as well as financial statements. No offering or sale of securities in the United States is contemplated.
DISCLAIMER CLAUSE OF SEBI: SEBI only gives its observations on the offer documents and this does not constitute approval of either the Issue or the specified securities stated in the Offer Document. The investors are advised to refer to pages 408 of the RHP for the full text of the disclaimer clause of SEBI.
DISCLAIMER CLAUSE OF BSE:It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the RHP has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the RHP. The investors are advised to refer to the pages 411 of the RHP for the full text of the disclaimer clause of BSE.
DISCLAIMER CLAUSE OF NSE It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Offer Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Offer Document. The investors are advised to refer to page 411 of the RHP for the full text of the disclaimer clause of NSE.
Capitalised terms which are not defined above have the meaning ascribed to them in the RHP.
For further details in relation to the Company, BRLMs, Company Secretary and Compliance Officer of the Company, availability of application forms and RHP, please refer to statutory advertisement dated July 12, 2023 published on July 13, 2023.
For further queries:
Shahab Shaikh, Concept PR, shahab@conceptpr.com, 93208 97525
Athira V Sunil, Concept PR, athira.v@conceptpr.in, 99872 89750
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