Netweb Technologies IPO Day 1: Issue subscribed 2.33 times; check latest GMP & other details

The initial public offering (IPO) of Netweb Technologies India witnessed a strong response from investors on the first day of bidding (Day 1), led by strong participation from employees, non-institutional investors (NIIs) and retail buyers. On Monday, Netweb Tech's IPO received 2,06,05,890 bids compared to the issue size of 88,58,630 shares, as per BSE data. The Rs 631-crore initial share sale is being sold in the range of Rs 475-500 apiece with a lot size of 30 equity shares and in multiples thereafter. The three-day stake sale, which kicked off today, would end on Wednesday (July 19).

On Day 1, the IPO was subscribed 2.33 times. The portion reserved for employees saw the maximum push and was subscribed 6.60 times. The quota for NIIs was booked 3.61 times, whereas the allocation for retail individual investors fetched 3 times of the total bids. On the flipside, the category for qualified institutional buyers (QIBs) was subscribed merely 3 per cent.

The company has reserved 50 per cent of offer for QIBs, while NIIs would get 15 per cent. The remaining 35 per cent of the offer is for retail bidders.

A majority of brokerages were positive on the issue, citing its strong business fundamentals, robust balance sheet and reasonable valuations compared to its peers.

Reliance Securities said, "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 'Subscribing' to the issue."

Nirmal Bang also assigned a 'Subscribe' tag. "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," it stated.

Yash Kukreja, Research Analyst at Mehta Equities, said, "On a valuation basis, Netweb Tech's higher price band demands a P/E multiple of 59.7x (on its FY23 earnings), which appears to be on the higher side due to the company's niche product segment of private cloud services and its advantageous position as a first mover in the listed space, which commands a premium. We believe such businesses would get strong demand in the IPO offer. Hence, we recommend investors to 'Subscribe for listing gains' only."

Geojit said, "The company is well-positioned to capitalise on the Indian IT industry's growth. Therefore, we assign a 'Subscribe' rating for the issue on a short to medium-term basis."

Latest grey market price (GMP)

In the grey market, Netweb Tech shares were last seen trading at a 75 per cent premium against its issue price of Rs 500 (higher end).

Ahead of its IPO, the company raised Rs 189 crore from anchor investors by allocating 37.8 lakh equity shares at Rs 500 per share. Nomura Funds, Goldman Sachs Funds, ICICI Prudential Mutual Fund (MF), HDFC MF, WhiteOak MF and Nippon MF were among those participated in the anchor round.

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

Watch: AI images of South actors Allu Arjun, Mahesh Babu, Suriya, Kamal Haasan, Bollywood stars Alia Bhatt, Hrithik Roshan as Vikings characters

Also Read | Zomato shares halt five-day climb, slip 3% today; what's next: Rs 70 or Rs 90?

Also Read | Market at record high! Nifty settles above 19,700, Sensex gains 529 points; SBI, Wipro rise 3%; Route Mobile tanks 9%