Detailed Rationale

Crisil Ratings has upgraded its rating on the long-term bank facilities of Netweb Technologies India Limited (NTIL) to 'Crisil A+/Stable' from 'Crisil A/Stable’ and has reaffirmed its ‘Crisil A1' rating on the short-term bank facilities

 

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 three fiscals through 2026; revenue is achieved at ~Rs 2,183 crore during fiscal 2026. Furthermore, a healthy order book of Rs 2,098 crore along with L1 orders of Rs 328 crore, as of March 2026, 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 ~13.4% in fiscal 2026, it is partly offset by revenue growth witnessed during these fiscals through 2026 which is likely to sustain above Rs 2800-3500 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 2.1 time as on March 31, 2026. 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 strong market presence supported by the extensive experience of the management team in the high-performance computing (HPC), storage and cloud business segments, established design architecture capabilities driven by continuous investment in R&D and its healthy financial risk profile. These strengths are partially offset by working capital-intensive operations and exposure to high supplier and customer concentration risks and growing competition.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of NTIL.

Key Rating Drivers - Strengths

Strong 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 70% CAGR over three fiscals to Rs 2,138 crore in fiscal 2026 (Rs 1,149 crore in fiscal 2025). 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. 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. Growing demand for HPC, cloud services, data centres and AI with favourable government initiatives will continue to support the business risk profile.

 

Established design architecture capabilities driven by continuous investment in R&D: The company boasts a robust R&D team driving innovation and adaptability and is investing 2-3% of annual revenues to future-proof its software stack, thereby mitigating the risk of technological obsolescence in every segment. Long-standing relationships with key suppliers like Nvidia, Samsung, AMD and Intel enable access to technological roadmaps 9-12 months in advance, facilitating design architecture planning to deliver cutting-edge solutions for customers. This robust foundation has delivered a healthy 29-33% return on capital employed over the past two years, and with a growing customer base and increasing client engagement, the company is poised for sustained medium-term growth in revenue and profitability.

 

Healthy financial risk profile: The company’s networth increased to over Rs 720.9 crore as on March 31, 2026, with healthy accretion to reserves. To fund the incremental business growth, the dependence on debt also remains slightly higher than previously projected at year end. Despite this, continuous accretion to reserve will lead to average capital structure ratios as indicated by gearing at 0.2-0.3 time and TOLTNW ratio at 1-1.5 time over the medium term (at 0.38 time and 2.1 times, respectively in fiscal 2026). Comfortable gearing demonstrates financial flexibility over the medium term. The debt protection metrics remain robust due to healthy profitability leading to interest coverage ratio of over 14-15 times in medium term (at 22.3 times in fiscal 2026). 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.

Key Rating Drivers - Weaknesses

Working capital-intensive operations: Gross current assets (GCAs) are at 268 days (without cash) as on March 31, 2026, compared to 205 days as on March 31, 2025, driven by debtors of 112 days and inventory of 155 days. The working capital requirements are expected to remain at higher levels in the medium term at the year end. 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 adequately maintained to fulfill the orders in hand. 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 high supplier and customer concentration risks amidst growing competition: The company relies heavily on its top three suppliers, which account for 65-70% of procurement, with significant percentage of components imported from Taiwan. The company's business growth thus remains vulnerable to supply chain disruptions, particularly with regards to memory, chips, and other key components, as well as intense competition in the global IT-enabled services sector, which could lead to pricing pressure and constrain profit margins. Further, the top five customers account for around 65-70% of the total revenues, with the customers profile changing due to replacement demand after every few years, but the end-user industry remains in educational research and development and artificial intelligence exposing the company to any change in their purchasing patterns. As it operates in a highly research-oriented business, availability and retention of a skilled R&D workforce continues to remain a key challenge. As technology continues to evolve, NTIL's ability to maintain partnerships, withstand competition, and sustain revenue growth with steady operating profitability will remain a key monitorable.

Liquidity Strong  

Liquidity is healthy, marked by a surplus (cash and bank balance and investment in free fixed deposit receipts) of around Rs 350-370 crore as on March 31, 2026. Further, it is marked by sufficient cash accrual and low bank limit utilisation. Expected cash accrual of Rs 250-300 crore should comfortably cover the NIL annual term debt obligation over the medium term. Fund based Bank limit utilisation was low averaging 24% for the 12 months ended April 2026. Current ratio was comfortable at 1.4 times as on March 31, 2026. The promoters are likely to extend support through equity and unsecured loans to cover the working capital requirement and debt obligation. Besides, liquid surpluses are also expected to gradually build up over the medium term..

Outlook Stable

Crisil Ratings believes NTIL will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors

• Sustained revenue growth to over Rs 4,000 crore, with diversification across the end users earning steady operating margin at 13-14%, leading to higher-than-expected net cash accruals
• Efficient working capital management leading to moderate dependence on debt and sustenance of healthy financial risk profile and liquidity

 

Downward factors

• Decline in revenue below Rs 2,000 crores or fall in operating margin to below 11%, leading to lower-than-expected net cash accrual
• Large, debt-funded capex or substantial increase in the working capital requirement, thus weakening the financial risk profile and liquidity

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.

Any other information: Not applicable