Recommendation from Consumer Durables Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.

Netweb Technologies India Ltd : POWERING AI & HIGH-PERFORMANCE COMPUTING FUTURE

HERE IS WHY
✓  Strong AI-Led Growth Momentum
✓  Robust Order Book Visibility
✓  High Return Ratios with Strong Balance Sheet

The global technology landscape is witnessing a structural transformation driven by AI, cloud computing, high-performance computing (HPC), and data localisation requirements. As enterprises, governments, research institutions, and hyperscalers increasingly adopt AI-driven workloads, demand for advanced computing infrastructure is rising sharply. Considering these factors, we recommend Netweb Technologies India Ltd as our Choice Scrip.

Netweb Technologies is one of India’s leading indigenous high-end computing solutions providers, specialising in HPC, AI systems, private cloud infrastructure, enterprise workstations, and data centre servers. Unlike traditional IT hardware players, the company operates in specialised and high-entry-barrier segments where technological expertise, customisation capability, and strong customer relationships play a critical role. Netweb serves marquee customers across government, Defence, education, BFSI, research institutions, IT, manufacturing, and emerging AI-driven enterprises.

The company has strategically positioned itself as a key beneficiary of India’s AI infrastructure buildout. Netweb’s portfolio includes GPU-based AI systems, supercomputing infrastructure, private cloud solutions, storage systems, and enterprise computing platforms. A major structural shift in Netweb’s business is visible in its revenue mix. AI systems have emerged as the company’s fastest-growing segment, witnessing an exceptional growth of 459.6 per cent YoY in FY26 and contributing approximately 43.4 per cent of total revenue. This transformation significantly strengthens the company’s positioning, as AI systems typically command better pricing, stronger margins, and long-term customer engagement compared to conventional computing hardware.

In Q4FY26 revenue stood at ₹774 crore compared with ₹415 crore in Q4FY25, reflecting robust growth of 86 per cent. EBITDA for the quarter stood at ₹97 crore, while PAT came in at ₹71 crore compared with ₹43 crore in Q4FY25, reflecting growth of 65 per cent.

One of the strongest positives for Netweb remains its robust order visibility. The company entered FY27 with a firm order book of around ₹2,100 crore and an order pipeline of approximately ₹2,400 crore, including L1 orders. Management remains optimistic about future growth and has guided for revenue growth of 35–40 per cent over the next few years while maintaining EBITDA margins in the range of 13–14 per cent. The company expects strong momentum from AI systems, private cloud deployments, sovereign computing initiatives, and enterprise digital transformation spending. Netweb’s debt remains manageable, with a debt-toequity ratio of 0.39x. Return ratios continue to remain strong, with ROCE at 37.5 per cent and ROE at 32.8 per cent. Over the last three years, the company has delivered an impressive sales CAGR of 69.9 per cent and profit CAGR of 63.7 per cent. From a valuation perspective, the stock is currently trading at a P/E of 106x, significantly above the industry average of 26.1x. However, the company has historically traded at premium valuations, and the current multiple remains below its three-year median P/E of 150.9x. The PEG ratio of 1.67 suggests valuations remain supported by strong earnings visibility and sustained growth expectations. With India’s AI infrastructure ecosystem still at an early stage, Netweb Technologies appears well positioned to benefit from structural tailwinds in sovereign computing, enterprise AI adoption, and highperformance computing. Supported by strong order visibility, accelerating AI-led revenue mix, robust return ratios, and healthy financials, we recommend a BUY.