Netweb Technologies delivers big time with 90% gain on listing day. Should you buy more?

Continuing the trend of strong listings in the second half of the year, Netweb Technologies shares listed at a robust premium of nearly 90% on the exchanges on Thursday.

During the day, the shares jumped to hit a high of Rs 953 over the issue price of Rs 500. It is currently trading at Rs 941, nearly 88% above the offer price.

The strong listing was in line with expectations, reflecting the trend in the grey market. The company also has a strong track record of growth and its financial performance has been improving in recent years.

Analysts advise investors to hold the stock currently, adding that the aggressive ones can choose to buy during dips.

"Netweb Technologies is well-positioned to benefit from the growth of the high-end computing market in India, as it has a strong focus on the niche business segment of high-end computing solutions," said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"After listing at such a level, we will suggest holding as of now with a stop loss at around Rs 850. However, aggressive investors can still choose to buy during any subsequent dip," Mishra said.

Proceeds from the issue will be used for funding its capital expenditure, long-term working capital, and repayment, in full or in part, of debt.

The IPO of Netweb, a leading high-end computing solutions (HCS) provider with fully integrated design and manufacturing capabilities, was subscribed 90.36 times at close.

On the upper end of the price band, the issue is valued at a P/E of 55.1x based on FY23 earnings.

Netweb is one of the few OEMs in the country which is a recipient of production-linked incentives schemes for IT hardware and telecom and networking products manufacturing in India.

The company develops homegrown computing and storage technologies, deploying supercomputing infrastructure to meet the rising computational demands of businesses, academia, and research organisations.

So far, 3 of their supercomputers have been listed 11 times in the world's top 500 supercomputers.

Between March 2022 and May 2023, the company almost doubled its order book value from Rs 48.5 crore to Rs 90.2 crore.

For FY23, revenue from operations increased 80% to Rs 445 crore, mainly due to an increase in the sales, private cloud and HCI, supercomputing systems. Net profit for the period more than doubled year-on-year to nearly Rs 47 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)