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  • Nov 28, 2023 - Compete or Die: Netweb Technologies Joins the Artificial Intelligence Race

Compete or Die: Netweb Technologies Joins the Artificial Intelligence Race

Nov 28, 2023

Compete or Die: Netweb Technologies Joins the Artificial Intelligence Race

Unless you're living under a rock or you're a total novice to the investing community, you would have heard about Nvidia's dream run in recent months.

The company became the seventh member to join the trillion-dollar club earlier this year.

The company defines itself as the world leader in artificial intelligence (AI) computing.

Nvidia is not necessarily betting on any single AI application, but rather a macro bet on the technology becoming more pervasive and valuable.

And the results speak for themselves in that regard.

Nvidia's Dream Run

You see, AI is taking the world like a storm. AI appears to be benefiting the large players much more than the small players at the moment.

Plenty of startups are being built, but Microsoft, Google, and other large firms appear to be fully focused on incorporating this technology into their current products and services.

In India, the US-based chipmaker Nvidia inked partnerships in September 2023 with the country's biggest conglomerates Reliance Industries and Tata Group.

Infosys joined hands with Nvidia in the same month for generative AI solutions to boost productivity.

Meanwhile, L&T Technology has also partnered with Nvidia to boost medical imaging via AI.

Several more companies are likely to join the bandwagon as the AI megatrend is here to stay.

Adding to the list of companies, a newly listed Indian firm today partnered with Nvidia for AI and high-performance computing.

About Netweb Technologies

The company in question is none other than India's computing solutions provider - Netweb Technologies.

It designs, manufactures, and deploys high-computing solutions (HCS) comprising proprietary middleware solutions, end-user utilities, and precompiled application stack.

It develops compute and storage technologies, and deploys supercomputing infrastructure to meet the rising computational demands of various industries under India's National Supercomputing Mission.

Earlier this year in July 2023, Netweb Technologies made a stellar debut listing at Rs 947 apiece, a massive premium of 89%. Its IPO offer price was Rs 500.

The Partnership with Nvidia

On 27 November 2023, Netweb Technologies informed the exchanges that it has collaborated with Nvidia for AI and to unlock the potential of high-performance computing.

The company is now a manufacturing partner for the Nvidia Grace CPU Superchip and GH200 Grace Hopper Superchip MGX server designs.

Netweb will build and produce more than ten server variations under its Tyrone range of AI systems. These are used in a wide range of AI and high-performance computing and supercomputing applications.

Commenting on the partnership, the company's MD said this partnership will give a major boost to the Make-in-India initiative. It will bring locally manufactured cutting-edge technologies at par with global standards.

Strong Growth Prospects

At the time of its IPO, the company received an overall subscription of over 90 times. This was the first sign of optimism surrounding the company.

However, soon after listing, the company posted a marginal drop in its topline as well as bottomline which led to a decline in its share price.

But the company came back with stellar results in the second quarter of FY24.

Total revenues more than doubled to Rs 1.5 billion (bn) on a YoY basis while net profit spiked 66% to Rs 151 million (m).

In its earnings presentation, the company said it expects to finish FY24 on a strong footing and has a robust business pipeline of around Rs 31.5 bn.

During the quarter, it received one order from a PSU bank for switching to private cloud. All public sector banks (PSBs) are expected to shift to private cloud in the future, according to the management.

Going forward, the company is optimistic of getting more orders in the generative AI and 5G space.

It has guided for a strong 30-40% CAGR in revenue for the next two to three years.

In the past three years, the company's sales have more than tripled while net profit has risen over 4 times.

Financial Snapshot

Rs m, standalone FY20 FY21 FY22 FY23
Net Sales 1,560.1 1,427.9 2,470.3 4,449.7
Growth (%) - -8% 73% 80%
Operating Profit 92.9 158.9 355.1 706.9
OPM (%) 6% 11% 14% 16%
Net Profit 39.1 82.3 224.5 469.4
Net Margin (%) 3% 6% 9% 11%
ROE (%) 28.6 46.4 67.9 69.2
ROCE (%) 29.2 36.9 52.6 66.4
Dividend (Rs) 0.0 0.0 0.0 0.0
Debt to Equity (x) 1.0 1.3 0.8 0.3
Data Source: Ace Equity

Stock's Reaction to the News

Reacting to the AI partnership news, shares of the company spiked 10% to hit a high of Rs 891 in early trade.

The stock fell 2% as the session progressed and it's currently trading higher by 8% at Rs 880.

Netweb Technologies has a 52-week high of Rs 953 touched on 27 July 2023 and a 52-week low of Rs 740 touched on 26 October 2023.

In the past one month, the stock is up over 17%.


One of the main catalysts for the stock market rally that we're seeing right now was the launch of ChatGPT back in November 2022.

It spread like wildfire and reached multi-million active users in no time.

The AI buzz has propelled the Nasdaq index to record one of its best years since inception.

The recent Sam Altman saga was also quick to make headlines across financial dailies.

We can all see the impact that AI is having on the stock market.

Many tech companies have started name-dropping "AI" on their earnings calls. Venture capitalists and investors have been throwing money at AI firms at absurd valuations.

Maybe we're seeing the classic example of free market competition where ultimately, the best companies win. The smaller AI companies could potentially become the big tech companies.

Although picking stocks in a growth industry comes with a lot of uncertainty, the top AI stocks are all worth considering. Plenty of companies can profit from AI.

There will be winners and losers when a new technology like AI takes center stage. But if you are careful and don't get caught up in the hype then we believe you have a great opportunity to create wealth.

At Equitymaster, we believe the AI megatrend is here to stay and it will have profound implications not just for tech companies, but for supply chains, manufacturing, auto, advertising and so on.

By the way, we're hosting our yearly annual conference soon and the big theme we're covering this time is artificial intelligence.

If you don't have a plan to build wealth in an AI integrated world, register for Equitymaster's Conference 2024 where we discuss the future of investing in an AI driven world.

Happy Investing!

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Yash Vora

Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.

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