The introduction of DeepSeek, a breakthrough AI technology from China, shook the global tech landscape, raising concerns about reduced demand for high-performance computing. This unease rippled through markets, triggering a sharp drop in Nvidia’s stock, reflecting investor fears about the future of GPU-driven AI workloads.
But why should Indian investors care? Enter Netweb Technologies, the link between this global event and India’s burgeoning AI ecosystem.
Netweb, a key Nvidia partner, wasn’t spared the turbulence. Its stock plunged by 50%, mirroring market fears. However, with the dust settling and the stock recently rebounding, is this a temporary hiccup or a chance to reassess Netweb’s pivotal role in India’s digital transformation?
The Netweb Journey
In the global AI race, software might steal the limelight, but the real work happens behind the scenes, powered by high-performance hardware like supercomputers and AI servers. This is where Netweb Technologies, India’s homegrown leader in high-performance computing (HPC), shines.
Founded in 1999, Netweb has come a long way from building custom computing solutions to emerging as a leader in AI workstations, supercomputers, and private cloud infrastructure. The numbers say it all—revenues soared 5x from Rs. 88 crore in FY21 to Rs. 724 crore in FY24, thanks to its ability to ride India’s AI adoption wave.
Netweb stands apart with its custom-built approach, designing and integrating systems tailored to clients’ needs—unlike global giants like Dell and IBM that focus on off-the-shelf solutions. This strategy has earned it deals across diverse sectors, including AI, research, defence, and telecom. A key enabler of this success has been NVIDIA, whose GPUs (Graphics Processing Units) help process vast amounts of data quickly, making them ideal for tasks like AI and deep learning.
In fact, its crown jewel? AIRAWAT, India’s most powerful AI supercomputer, ranked among the world’s top 100 is also created with the help of Nvidia’s A100 Tensor Core GPUs . With over 300 supercomputers and 4,000+ AI workstations deployed, Netweb is already a key player in India’s AI infrastructure growth.
Looking ahead, the company is broadening its horizons. It is venturing into telecom and data centres, leveraging the Rs. 10,000 crore 5G opportunity by manufacturing critical components like 5G ORAN and network switches. This diversification aligns perfectly with India’s 5G rollout and growing data traffic.
Numbers that Matter
Netweb operates across several high-growth verticals, with AI and HPC driving its expansion
Segment | FY24 Revenue Share | FY27E Revenue Share | FY24-FY27 CAGR | Growth Drivers |
High-Performance Computing (HPC) | 36% | 34% | 42% | AI training, supercomputers (AIRAWAT) |
Private Cloud & HCI | 37% | 30% | 36% | Rising cloud adoption |
AI Systems & Workstations | 11% | 19% | 49% | AI/ML workloads |
High-Performance Storage | 5% | 3% | 30% | Data storage needs |
Data Centre Servers | 5% | 3% | 18% | Booming data centre market |
Switches & 5G ORAN | 0% | 6% | 135% | Telecom expansion |
Software & Services | 2% | 3% | 40% | AI and cloud solutions |
Netweb's AI-related solutions, which currently contribute 11% of FY24 revenue, are projected to grow at a robust 49% CAGR by FY27, expanding to 19% of total revenue, driven by surging AI and machine learning (ML) workloads.
Although EBITDA margins dipped from 15.7% in FY23 to 14.2% in FY24 due to lower-margin government contracts and R&D investments, they are expected to bounce back to 16%+ by FY27.
This improvement will be driven by higher-margin AI solutions, private cloud offerings, and benefits from government PLI incentives for local manufacturing.
Financially, Netweb remains strong. Its asset-light model focuses on design and assembly while outsourcing manufacturing, leading to a healthy ROCE of 38%.
Post its Rs. 630 crore IPO in July, 2023 the company cleared all debt, ending FY24 with a robust cash position of Rs. 222 crore (22% of revenue), projected to exceed Rs. 300 crore by FY27.
Valuation Snapshot
Netweb Technologies is trading at a one-year forward P/E of 51x, which might seem steep at first glance. However, the company’s positioning in high-growth markets like AI and 5G, which are still under-penetrated in India, provides a strong growth runway. As adoption of these technologies accelerates, Netweb is well-poised to capitalise on the expanding opportunities.
The premium valuation reflects optimism around Netweb's ability to capture a larger market share in these emerging sectors. With its custom solutions, strategic partnerships, and focus on innovation, the company is uniquely positioned to benefit from the rise of AI and 5G, making its valuation more justifiable for long-term investors.
While valuations reflect strong growth potential, Netweb’s ability to sustain its momentum will depend on how well it capitalises on key opportunities while managing emerging risks.
Opportunities and Challenges
Opportunities
Surging AI Adoption – Growing demand for high-performance computing is driving Netweb’s core business.
Global Expansion – Exports contribute 7.9% of revenue currently, and with company expanding in regions like Middle East , it will further reduce dependence on the Indian market.
Long-Term Growth Drivers – Success will depend on execution, innovation, and maintaining leadership in AI infrastructure.
Challenges
Order Inflow Dependence – Short 8–16 week execution cycles mean any slowdown in new orders could impact revenue predictability.
Margin Pressure – Rising competition from global tech giants and Indian IT firms in HPC and AI infrastructure could squeeze profitability.
Nvidia Dependence – Reliance on Nvidia’s GPUs makes Netweb vulnerable to supply chain disruptions or strategic changes.
AI Mission Uncertainty – While India’s Rs. 10,000 crore AI Mission is a major opportunity, the execution timeline remains unclear.
Conclusion
Netweb Technologies isn’t just riding the AI wave—it’s laying the foundation for India’s AI-driven future. From supercomputers to 5G infrastructure, Netweb is positioning itself as the backbone of India’s digital transformation.
While challenges like competition and margin pressures persist, the company’s strategic pivots and strong execution capabilities place it at the centre of India’s tech growth story. Whether it can fully capitalise on these opportunities remains to be seen, but its potential is hard to ignore.
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