A unique and comprehensive play in HCS
Netweb is India’s leading high-end computing solutions (HCS) provider. Its offerings span: 1) HPC; 2) private cloud and HCI; 3) AI systems; 4) data centres; 5) HPS; and 6) software and services for HCS. HPC, private cloud and AI systems are its high growth segments with 77% FY22–25 CAGR. It is present in both hardware and software segments and offers hardware design, manufacturing and software capabilities, with a sole-mover advantage. Sectoral tailwinds include: 1) high domestic computing and data centre demand; and 2) government support from IndiaAI and National Supercomputing Mission. Netweb’s USP lies in: 1) it being India’s only full-stack hardware provider, fortified by its design offerings, implementation and software stack; 2) its marquee clients with strong support from government programmes; and 3) its strong partnerships with OEMs like NVIDIA, AMD and Intel, aiding robust offerings.
We model FY25–28E revenue/PAT CAGRs of 59%/58% and ascribe a 56x target multiple (in line with Dixon Technologies’ lifetime average P/E) on Dec’27E-ending EPS of INR 73. Our TP stands at INR 4,110. We bake in an INR 21.8bn fillip from the IndiaAI Mission order and factor in FY26–28E ex-strategic orders’ revenue CAGR of ~38%. We initiate coverage with a BUY rating. Key risk: Business’ non annuity nature.
Superlative growth in top three segments
Netweb’s portfolio consists of eight segments, of which: 1) HPC (High Performance Computing); 2) HCI (Hyper-Converged Infrastructure); 3) AI systems and workstations are the three key high-growth segments that the company is focusing on in the short–medium term. The FY22-25 CAGR of the combined revenue of these 3 segments was 77%, up from 45% during FY20-23. Together, these three segments formed 89% of its Q2FY26 revenue, up from 71% in Q1FY23. Other segments, such as colocation data centres, are not the company’s focus, as maintaining differentiated offerings based on R&D is key for Netweb.
OEM partnerships with chip makers
Netweb has partnerships with NVIDIA, AMD and Intel. Netweb is NVIDIA’s only OEM partner in India. Being NVIDIA’s OEM partner, Netweb gets early access to its latest chips and architectures. Its strategic collaborations with technology partners – Intel, AMD, and NVIDIA – allow continuous updates. This enhances Netweb’s product and service offerings, as it gets early product pipeline access of latest chips – 12–24 months ahead; accordingly, designs servers and AI systems.
