The company’s first quarter results were largely-in line on the sales front, while margins beat estimates. Order intake was also very strong.
The company’s profit after tax (PAT) increased to ₹85.3 crore from ₹30.4 crore last year and from ₹70.5 crore in the previous quarter.
Revenue for the quarter increased to ₹819 crore from ₹301 crore in the first quarter last year and from ₹773.7 crore sequentially.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) increased to ₹119.8 crore from ₹44.5 crore last year and from 96.5 crore last quarter.
Its EBITDA margin of 14.6% was marginally lower than 14.8% in the year-ago period but expanded from 12.5% sequentially.
Netweb Tech’s order pipeline is worth ₹10,410 crore and its lowest bidder order pipeline is worth ₹848 crore. Its reported order book came at ₹2,506 crore.
The AI segment continues to be a growth driver accounting for 63% of its revenue. The AI segment saw growth of 484% from the previous year. Its net working capital days came in at 96 days compared to 84 days last quarter and 73 days in the previous year.
The two things that stand out for the company are:
- At the end of the June quarter, its order book (including strategic orders) was worth ₹2,506.9 crore compared to ₹2,097,6 crore at the end of the March quarter.
- Big increase in order pipeline and lowest bidder order pipeline with inclusion of strategic orders on a sequential basis.
ICICI Securities Bullish
Brokerage firm ICICI Securities has maintained its “buy” rating on the stock and has a price target of ₹5,360 apiece, indicating an upside of 27.8% from its previous closing price.It said Netweb Tech reported a robust revenue growth of 172%, ahead of the brokerage’s estimates, led by traction in high performance computing (HPC)/AI and EW segments.
Its key notables were:
- Top-3 strategic segments’ strong growth continued
- Strong pipeline of 10,410 crore, up 151% from last year.
- Strong partnerships with suppliers.
The brokerage sees a higher one-year forward price-to-earnings ratio of 66x on superior performance on all counts. It has also raised its growth estimates of HPC segment, built-in better margins, expanding FY27-28 estimated earnings per share (EPS) by 1%-2%.
ICICI Securities also mentioned the following key risks for the stock:
- Non-annuity nature of business with lumpy strategic orders.
- Margin impact in quarters with large strategic order execution and increase in raw material costs arising from supply chain constraints.
All three analysts who have coverage on the stock have “buy” ratings on it.
Shares of Netweb Tech gained 9.6% to hit an intraday high of ₹4,598 apiece on Friday. The stock has gained 46.4% this year, so far.
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