| Netweb Technologies India Limited | ||||||
| Ratings upgraded to 'Crisil A/Stable/Crisil A1' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has upgraded its ratings on the bank facilities of Netweb Technologies India Limited (NTIL) to ‘Crisil A/Stable/Crisil A1’ from ‘Crisil A-/Stable/Crisil A2+’.
The rating upgrade reflects sustained improvement in the business risk profile of the company, driven by healthy scalability and range bound operating profitability. Regular addition of new customers and diversification in product and service offerings such as graphics processing unit (GPU)-based artificial intelligence (AI) infrastructure have led to ~70% compound annual growth rate (CAGR) in revenue over the four fiscals through 2025; revenue is achieved at ~Rs 1,149 crore during fiscal 2025. Furthermore, a healthy order book of Rs 325 crore along with L1 orders of Rs 362 crore, as of March 2025, provide revenue visibility over the medium term. While operating profitability has moderated over the past couple of years, from 15.8% in fiscal 2023 to ~14.2% in fiscal 2025, it is partly offset by revenue growth witnessed during these fiscals through 2025 which is likely to sustain above Rs 1300-1400 crores in medium term. Going forward, NTIL’s ability to maintain its operating profitability, amidst sustained business growth, will remain a key monitorable.
The ratings upgrade also factors in the company’s strong financial risk profile and liquidity amidst low dependence on external debt. Though operations continue to remain working capital intensive, the dependence on external debt has remained negligible, leading to total outside liabilities to tangible networth (TOLTNW) ratio of 0.7 time as on March 31, 2025. Absence of term debt repayments, cushion in bank lines and access to unencumbered cash and cash equivalent further aid liquidity.
The ratings continue to reflect the established market presence supported by the extensive experience of the management team in the high-performance computing (HPC), storage and cloud business segments, and its strong financial risk profile. These strengths are partially offset by working capital-intensive operations and exposure to intense competition. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of NTIL. |
Key Rating Drivers & Detailed Description Strengths: Established market presence supported by the extensive experience of the management team: Supported by an experienced management team, NTIL has established its presence and built a significant market share over nearly two decades. Continuous in-house research and development (R&D) offer the latest technology and new products, resulting in 69% CAGR over three fiscals to Rs 1,149 crore in fiscal 2025 (Rs 724 crore in fiscal 2024). The management has longstanding relationships with established customers such as Indian Institute of Technology, Indian Space Research Organization (ISRO), Railtel, University of Delhi, Infosys, Yotta, Zoho and Tata Consultancy Services (TCS). The clientele is diversified across geographies and the company is also recipient of the production-linked incentive (PLI) scheme which is a flagship scheme of the Government of India. It is one of the few Indian enterprises under this scheme in the server category. It has installed more than 300 made-in-India HPC units and is one of the few players in the market providing end-to-end supercomputing and cloud service solutions. Furthermore, it has also been awarded PLI in the IT Hardware sector. Growing demand for HPC, cloud services, data centres and AI with favourable government initiatives will continue to support the business risk profile.
Strong financial risk profile: The company’s networth increased to over Rs 522 crore as on March 31, 2025, with healthy accretion to reserves. The dependence on debt also remains limited, which has led to strong capital structure as indicated by nil gearing and TOLTNW ratio below 0.7 time on the same date. The debt protection metrics remain robust due to moderately healthy profitability leading to interest coverage ratio of over 34 times in fiscal 2025. In the absence of any debt-funded capital expenditure (capex) and expected accretion to reserve, Crisil Ratings expects the company’s financial risk profile to remain strong over the medium term.
Weaknesses: Working capital-intensive operations: Gross current assets (GCAs) are at 200-210 days (without cash) as on March 31, 2025, compared to 168 days as on March 31, 2024, driven by debtors of 110-115 days and inventory of 80-85 days. The company records 30-40% of revenue in the last quarter of the fiscal, leading to higher receivables towards end of the fiscal and usually receives payments within 70-90 days. The working capital cycle is also stretched because of high inventory holding as majority of the raw material is imported and, therefore, adequate inventory needs to be maintained. While prudent working capital management has resulted in timely realisation of receivables and liquidation of inventory, its sustenance amidst revenue growth will be closely monitored.
Exposure to intense competition: Intense competition can lead to severe pricing pressure, constraining the profit margin. Furthermore, any change in technology would require realignment of products in consonance with end users. With the rapid evolution of the global IT-enabled services sector, competition is intensifying as more companies vie for a share of the revenue pie. NTIL competes with international players in most of the verticals. Availability of low-cost skilled talent is also a key variable in this industry. Going forward, company’s ability to withstand the competition, leading sustained revenue growth amid steady operating profitability will remain a key monitorable. |
Liquidity: Strong Bank limit utilisation was low at 27% on average for the 12 months through May 2025. Cash accrual is expected to be Rs 125-135 crore which will be sufficient against term debt obligation of Rs 0.5-1.0 crore over the medium term, and the surplus will cushion liquidity. Unencumbered cash and bank balance of around Rs 170 crore further aid liquidity; these will be utilised for incremental working capital requirement. Low gearing and moderate networth support financial flexibility, which will help to withstand adverse conditions or downturns in the business. |
Outlook: Stable Crisil Ratings believes NTIL will continue to benefit from the extensive experience of its promoters and established relationships with clients. |
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About the Company NTIL was incorporated in 1999 as a proprietorship firm and later reconstituted as a private limited company in 2016 and as a public limited company in fiscal 2023. The company provides a range of computer server solutions such as HPC, storage, deep learning, big data analytics, cloud and virtualisation. NTIL was involved in the implementation of Kabru supercomputer (India's second-fastest computer) and PARAM YUVA II (fastest supercomputer) and is participating in the National Supercomputing Mission of the government of India. The company is headquartered in Faridabad and has development centres across India. It is promoted by Mr Sanjay Lodha and his family members. |
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Any other information: Not Applicable |
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Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Criteria Details
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