Netweb Technologies India Ltd. (NSE: NETWEB) Q4 2025 Earnings Call dated May. 05, 2025
Corporate Participants:
Sanjeev Sancheti — Investor Relations Advisor
Sanjay Lodha — Chairman and Managing Director
Ankit Kumar Singhal — Chief Financial Officer
Hirdey Vikram — Chief Marketing Officer
Analysts:
Hardik Rawat — Analyst
Garvit Goyal — Analyst
Darshil Jhaveri — Analyst
Anand B — Analyst
Unidentified Participant
Sandeep Shah — Analyst
Nikhil Porwal — Analyst
Debashish Mazumdar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Netweb Technologies Q4 FY ’25 Earnings Conference Call hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assessions during the conference call, please signal an operator by pressing Star then zero on a touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Hardik Rawat. Thank you, and over to you, sir.
Hardik Rawat — Analyst
Good afternoon, everyone. This is Hardik. On behalf of ISI Capital. I welcome everyone to Network Technologies Q4 and Full-Year FY ’25 Earnings call. It’s the pleasure of having with us the senior management team of Network Technologies, led by CMD, Mr Sanjay Lodha; CFO, Mr Ankit Kumar Singhal; Whole-Time Director, Mr Naveen Lodha; Chief Sales and Marketing Officer, Mr Vikro; and Head of Advisors, the IR Advisor to Netro Technologies, Mr Sanjeev.
Without further delay, I’d like to hand over the floor now to Mr Sanjee Sancheti. Over to you, sir.
Sanjeev Sancheti — Investor Relations Advisor
Thank you,. Good afternoon to all the participants. Before I hand over the call to Mr Sanjay for the opening remarks, I would request and draw all attention to the safe-harbor statement in the earning call presentation. I request each one of you to go through the same before the Q&A starts so that you are aware of the same.
Thank you and over to you, Mr.
Sanjay Lodha — Chairman and Managing Director
Thank you, Hardik and Sanjeev. Good afternoon, and a warm welcome to all of you to Technologies Q4 and full-year financial year ’25 earnings call. I will take you through the business and the operational highlights of the quarter gone by, while our CFO, Mr Ankit, will share the financial metrics. We are delighted to report our highest-ever income and PAT for the — for the quarter Q4 financial year ’25 as well as for the fiscal year 2025. Our operating income rose by 55.9% year-on-year for Q4 financial year ’25 and by 58.7% year-on-year for full-fiscal financial year ’25, reaching 4,147 million in Q4 financial year ’25 and 11,490 million in fiscal year financial year ’25.
We continue to maintain our strong growth momentum, scaling rapidly on expanding base. We are pleased to announce that the Board of Directors have recommended a final dividend of INR2.50 per equity share, representing 125% dividend on the face value of INR2 per share. This translates to a dividends payout ratio of 12.4%. This is, however, subject to the shareholder approval. We are extremely happy to share that we have received our first claim under PLI scheme 2.0 for IT hardware amounting to INR59.4 million for a period from July 1, 2023 to, 31 March 2024. This achievement underscores the success of PLI scheme in boosting domestic production and creating employment opportunities.
We remain committed to in-house designing and producing world-class latest generation systems and supporting the Make in India initiative and contributing to India’s growth as a global manufacturing hub. India’s vibrant AI research landscape and an option across verticals fueled by government initiatives to develop indigenous LLMs offer significant innovation opportunities. Is strategically positioned to capitalize on this momentum, anchored by our focus on three pillars, HPC, private cloud and AI systems.
In financial year ’25, AI continued to be the major growth engine, contributing 14.8% to revenue and 112% year-on-year growth. In-line with our focused efforts in the AI space, we launched Skylus.ai in financial year ’25, a unified solution to set-up GPU-based AI infrastructure on the that optimizes GP resource management, simplifies deployment, the launch of AI may marks a significant step-in strengthening our leadership in design and solution of AI systems in India, contributing to the nation’s vision of becoming the AI factory of the world. We are building AI native infrastructure designed not just for today’s workload, but for the — for the intelligence-driven enterprises for tomorrow, where compute storage and orchestration are optimized end-to-end for large-scale AI and model operations.
One of the key objectives behind IPO was to attract new talent and retain our existing teams. I’m pleased to say that we have further strengthened our talent pool over the year, adding, adding total of 79 new team members, taking the total to 441, including 46 technical professionals taking the total to 238 technical professionals. This reflects our continuous focus on deepening domain expertise and enhancing business and operational capabilities. Innovation has been key driver for growth of the company over the last decade. In this line, the company applied for three patients in financial year ’25. Additionally, we were awarded one design patent in March ’25.
With this now, we have nine registered design patents with a strong order book and a robust business pipeline further reinforced by ongoing capability enhancements and strategic expansion of our product portfolio, we are well-positioned for sustained growth and continued technological leadership. Backed by this momentum, we are confident in achieving a 35% to 40% CAGR in top-line growth over the next couple of years. For the upcoming fiscal year, we are guiding for an operating EBITDA margin of 13% to 14% and a PAT margin of around 10%, reflecting our confidence on business momentum and our focus on profitable and scalable growth.
I would like to hand over the call to Ankit to provide updates on financial numbers. Thank you.
Ankit Kumar Singhal — Chief Financial Officer
Thank you, Sanjiv, sir. Thank you,. Good afternoon, ladies and gentlemen, and thank you for joining our earnings call.
Before we open the floor for Q&A, I will provide a brief overview of the financial performance for the quarter and the year gone by. I trust that by now you have had the opportunity to review our earnings presentation and press release. While our CMD has already discussed the macro outlook, I will delve deeper into financial performance, providing a more detailed analysis of the quarter gone by.
Our operating income increased by 55.9% Y-o-Y on quarterly basis, reaching INR4,146.5 million in Q4 FY ’25 and increased by 58.7% reaching to INR11,490.2 million in fiscal FY ’25. Our operating EBITDA for Q4 FY ’25 increased by 47.9% Y-o-Y, reaching INR597.7 million, while for fiscal FY ’25, it increased by 56.1% Y-o-Y, reaching INR1,600.1 million. The operating EBITDA margin for Q4 FY ’25 was 14.4% and for fiscal FY ’25, it stood at 13.9%.
Profit-after-tax PAT for Q4 FY ’25 grew by 45% Y-o-Y, reaching INR429.9 million, while for fiscal FY ’25, PAT increased by 50.8%, reaching INR1,144.8 million. PAT margin stood at 10.3% in Q4 FY ’25 and 9.9% for fiscal FY ’25. Return-on-equity for the FY ’25 was 24%, while return on capital employed for the same-period was 32.6%. The balance sheet strength is reflected by us being a zero net-debt company.
The company had net free-cash of INR1,621.3 million as on 31st March 2025, as compared to INR737.2 million as of 31st December 2024. Cash conversion cycle for Q4 FY ’25 improved to 73 days as compared to 88 days in Q3 FY ’25. Cash-flow from operations for Q4 FY ’25 was INR655.04 million, reflecting our disciplined and focused efforts to enhance cash generation through improved operational efficiency and working capital management.
The company successfully deployed SAP S4HANA to enhance control and oversight of all operational and financial processes. This upgrade enabled real-time insight streamlined workflows and stronger governance, supporting scalable and efficient growth. We remain firmly aligned with our strategic objectives and growth pillars, maintaining a clear focus on sustainable growth and long-term profitability, backed by a strong quarterly and year-to-date performance, a healthy order book and a robust business pipeline. We are well-positioned to deliver meaningful revenue and profit growth in the current financial year.
With this, I now hand over the call to.
Hardik Rawat — Analyst
Thank you. We can now proceed to the Q&A session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may chart and one on the touched on telephone. If you wish to remove yourself from the question queue, you may press char and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles, the first question is from the line of CA Garvit Goyal from Envest Analytics Advisory LLP. Please go-ahead.
Garvit Goyal
Hi, am I audi? Yes. Yes. Good evening, sir. Congrats for a good set of numbers. My first question is on the AI segment. You are mentioning we are growing very fast and the numbers are saying the same thing. I want to understand the key drivers for this particular segment and where do you see this segment three to five years ahead as a overall contributor to our total revenue sir. So that is my first question.
Hirdey Vikram
Yeah, hi. Thanks for the question. So you know, one thing is very clear that we have been telling from right from the IP days that AI is going to become the third important vertical for us and it is going to — we see a lot of headroom in the AI product vertical and that is what we have proven right as well. As you have seen that in the — in all the quarters in the past, we have shown such a significant progress in the AI product-line. So that way is we see a lot of headroom and the larger — largely the requirement which is coming is from both the enterprise and the government section both.
So from customer point-of-view, I think adoption of AI is happening at a very larger-scale. And this is definitely driven by a fact that the way the requirement of LLMs has grown multifold and it has been filled by all enterprises and government organizations that they need to have you know, private LLMs or the local LLMs or they need to have some sort of LLM services. There is something which is driving the AI adoption in a very different way. So we see that this is going to continue in subsequent years as well. And your question was that how do we see it after three to five years, we definitely see that AI is going to become one of the most fundamental base for any nation, not just limited to government organization, but even for the enterprise organizations as well. So definitely, we see a lot of headroom in the coming years as well..
Garvit Goyal
And what percentage are we targeting as a mix to our total revenue in next three to four years?
Sanjay Lodha
So basically as you know that, the company has been growing at a rate of around CAGR of around 35% to 40%. So all our segments are growing very fast. So basically though AI is growing at a faster rate, as I told you, it’s already grew at 112% approximately. So currently, it is around 15%, around 14.8% to 15% currently. We feel by end of year, this will be around somewhere around 20%, little — 19% to 20% of my over existing share it will have.
Garvit Goyal
And is there any margin differential in this category wherever we are able to get higher margins as compared to other segments.
Sanjay Lodha
So margin is almost all pretty same in all because we price our products in a different way. You know that our competition normally is all on the single-digit margin wherein basically we are around 14%. So basically we are already at a comfortable position and plus basically since there is a huge market to be captured, we want to price our products optimally and just not just try to basically charge margins initially or something of that nature. And you are seeing since we have been growing and we have almost all been able to maintain our margins very well. So I feel AI has got some little bits of extra margin, but I don’t think basically you should take it as similar margin profile.
Garvit Goyal
Understood. And sir, secondly, on the patent side, you mentioned we applied for three more patients and got one more patient in the month of March. So can you spend a few minutes on explaining what kind of patients are these? Are we able to enter into new areas via these or what is our exact thought process behind acquiring these patent sir?
Sanjay Lodha
So basically, you know that innovation has been very, very key in the journey actually over the period of 25 years, we have always been trying to innovate. We are completely integrated company wherein we design our products, we manufacture our products, we have our own software stack. It’s completely end-to-end. So basically in our processes, we are able to develop some — we are — since we have a huge R&D team, they are able to develop some unique features process. So we primarily try to patent them so that we remain secured on that. But actually we will not be enough — we are not in a position to divulge the details of what the patents are and all that because they are all under approval.
Garvit Goyal
Understood. So can you just tell us like the patents are belonging to the existing areas where we are generating the revenues or we are looking for new areas to enter it?
Sanjay Lodha
No, the patents are for existing areas only. They are primarily on the existing segments which we are working upon. So basically, so what we are trying — we are innovating so as to enrich the product lines. The new — basically we got recently, as you might have heard about it that has received very good traction. So we always work towards basically making our products much more friendly and much more adapt to the current requirements of the customers. So in that process, we do a lot of R&D and our patents are in those lines actually.
Garvit Goyal
Understood, sir. Thank you very much sir, all the best for the future.
Operator
Thank you. The next question is from the line of Darshul from Crown Capital. Please go-ahead.
Darshil Jhaveri
Hello. Good afternoon, team. Congratulations on a great set of results. Hope I’m audible. Hello. Good afternoon. You’re audible. Yeah, yeah. Thank you. Thank you. So just wanted to know like we’ve had such a great amount of growth and AI is also firing quite well. So over the next few years, what kind of revenue growth can we see like we have done I think over — this year growth has also been over 40% of last year growth. So just wanted to know what kind of growth that are we targeting for next year?
Sanjay Lodha
So basically, as we mentioned, from very beginning has been very clearly focused into the enterprise area only. While most of our customers are large government enterprises or large enterprises, primarily government and private. 50% of business is from government, 50% of business is from enterprises. So it’s very well-balanced actually. So basically the AI segment is growing and basically we have been saying that very clearly from the very beginning that last — if you see my report for last three years, you will see that basically we have been growing around 35% to 40%. I have been guiding that the same. So basically, we still would like to say that we see at least for next few years, the same growth momentum will be maintained. So that is exactly how I would like to say. And basically, I already indicated currently, since we are growing at my AI segment is one of the fastest growth mover for us, but still basically by the end-of-the year or by early next year, sometime it can go up till 20%. But basically since our private cloud and our HPC market is also growing, so this is the kind of mix we feel it will be.
Darshil Jhaveri
Okay, okay. Fair, fair enough, sir. And sir, just wanted to also pick your brain a bit about our order book. So I think in the presentation, it’s maintained like we have a huge pipeline. So could you just maybe elaborate a bit like how are these — what are these orders per pipeline like I think it’s around nearly INR4,000 crores. So these are long-term contracts, short-term, how are they working?
Sanjay Lodha
Yeah. So basically, as I have been telling on all — on each of my call for last eight quarters that basically our company cannot be really judged in terms of order book because order — basically order execution cycle for us is somewhere around eight weeks to 12 weeks. If you see my December quarter, once I presented the results, I mentioned that basically my order book is around INR350 crores, whereas basically my total revenue was INR440 crores. So basically order book normally almost on over in the next quarter. So basically, we are a company which is dependent upon our funnel actually the order pipeline. So order pipeline because we are proactive company, we have to understand that we work on large, we work on designing solutions for our customers, okay. We don’t go once the RFP is out. We go before the RFP is being published. So basically that’s the — that’s the way we work and basically it takes us around six months-to eight months-to work on a particular project and so that after that RFP is out and the execution is done. So basically, we have a huge pipeline of around INR4,000 crores and conversion ratio, which we have seen is around 60% and our pipeline closure is between six months-to even 18 months. So that’s how that gives us the confidence how we will be growing at 35% to 40% and we will be — we will be maintaining that growth.
Darshil Jhaveri
Ohh, okay. Execution you said is six to 18 months, right?
Sanjay Lodha
Execution is eight weeks to 12 weeks.
Sanjeev Sancheti
Yeah, execution is eight to 12 weeks, but he was talking about — since you were asking about the pipeline you see?
Darshil Jhaveri
Yeah, I. No, I was asking for — I think I understood okay, we get the order, we start working before the order book only. So in general, like for the pipeline, if you could just walk us through a bit like having a conversation with the customer starts in month one and two — by the time we deliver it, it would be the first 12 months or a bit more than that, that’s what I wanted to ask.
Sanjay Lodha
So basically, it can happen in 30 days, it can happen in six months, it can take one year. I will tell you like basically somebody is a supercomputer, okay? Then basically they start talking to us in the very beginning. Once we feel that they need a supercomputer, we start talking to them, they run their, we optimize their codes. We basically make them feel where their quoting, their ports will scale-up better, the kind of solution will work for them, then they design the RFP. So that’s the reason basically once it’s doing design and we do all the POC, everything for them. That’s the reason our conversion rate, if you see is around 60%, okay. So this — all this takes around six months also. So basically, this is a very variable time. It can happen in 45 days. But normally we have seen that average closure is at least it takes around six months approximately for our pipeline to conversion into an order book.
Darshil Jhaveri
So okay, sir. And just like one last question from my end. I think you know, international market is also a very good area for us. Any kind of conversation that we are having or what kind of a growth path we want to do for an export market, sir?
Sanjay Lodha
So basically, as you know that our domestic demand has been phenomenal. And basically this is the eight quarter result I’m presenting after listing. And you will see that for all the eight quarters consistency, we have grown at 35% to 40%. I think that itself basically shows the robustness in the company and the commitment we show to the market. So that is there. So domestic demand has been phenomenal. But if you see our books very clearly, export has started this year, it is somewhere around 5% to 7% of our current turnover and we feel that we will maintain this kind of percentage in future also because as I have been mentioning, we are not a kind of a consumer company or some kind of a box selling company, which will start selling products. Basically, our products are primarily moreover our production grade where basically for enterprise customers they use for their production machines. So we need to have inadequate support infrastructure so as to support them and that takes time. So we want to move gradually into that. So again, my commitment to the market will be 5% to 7% of export of our total.
Darshil Jhaveri
Okay, sir. That’s it from my side. All the best, sir. Thank you.
Operator
Thank you. The next question is from the line of Anand Bee from Kesma Wealth Private Limited. Please go-ahead.
Anand B
Good afternoon, sir. Can you hear me?
Sanjay Lodha
Good afternoon. We can hear you.
Anand B
Yeah, I believe one of the questions that previously been answered regarding AI segment. I want to drive your attention to the high-performance — high-performance computing segment. Currently, the — the segment revenue contribution from that is on 33% as you mentioned in the presentation. And where can we see that and the private cloud segment to grow in the next three, four years?
Sanjay Lodha
So basically, if you really see both the high-performance computing and private cloud, it’s not something which we have started doing yesterday. We have been doing it basically for a long-time as supercomputing, we are doing for 20 plus years. Private cloud and we have been doing for 10 plus years, okay. So as you know today how the data center market is booming. So basically that is definitely they see everything today doesn’t work on bare-metal, everything tries to work on private cloud. So there is a lot of traction for private cloud. So we feel the private cloud market always, if you see our the past quarterly results, there has been basically sometimes private cloud because 40%, sometimes 35%.
So basically, they remain a very, very good mix actually between them and we feel that will go on because private cloud market — we are not seeing the data center — data center market cooling off very soon, more-and-more compute requirement is growing. And as we got HPC is concerned, supercomputting is concerned, basically HPC has moved from research to basically various kind of users like oil and gas, consumers, lot of places actually if the uses of HPC has increased because in automobile, in manufacturing, various areas.
So basically that is also fueling its growth. More-and-more user applications are — complex applications are coming up, they are getting basically they take help from HPC. So our HPC expertise, our software and hardware stack customization and all really helps to scale that up. So we feel for some couple of couple of years that the — both these segments will be around 35% to 40% of our complete portfolio.
Anand B
Okay. This is for the next three, four years, we’ll maintain around 35% to 40%
Sanjeev Sancheti
Yes.
Anand B
Okay and okay that was answer and what will be the industry vertical right now as for the current financial year FY ’25?
Sanjay Lodha
I think that is mentioned in our presentation. Basically that’s — I think you can answer that.
Ankit Kumar Singhal
So the current sectors are IT, IT, yes, we have been doing with the BSFI. We have been doing with the space and defense and lot of government and public sector undertakings and higher-education research institutes, they have been our the prime segments in terms of customer application industry.
Sanjay Lodha
50% of business approximately comes from the government segment, 50% of business comes from enterprise segment. So that will give you a very good understanding.
Anand B
Okay, but industry-wise, can you give me like a percentage breakup of from these industry point-of-view?
Sanjeev Sancheti
It’s there in the slide, we can — what’s already there in the data, I will request you to go through the presentation which was circulated well in advance so that we can give time for more questions, which are not covered in the presentation.
Anand B
Okay. Okay, sure. Thank you.
Operator
Thank you. The next question is from the line of Hardik Rawat from IIFL Capital. Please go-ahead.
Hardik Rawat
Thank you. And congratulations team on another strong quarter. I’d like to begin with the — with the revised revenue position of satisfied to 40% CAGR that you’re giving out. And if I got it correctly, we are — we expect the AI Enterprise workstations vertical to form the free 20% of overall revenue for FY ’26, that’s correct, right?
Sanjeev Sancheti
Well, I would rather say that next year, it will go up to 20%. Now I’m not putting a date on that immediately, but I think it will move towards 20%.
Hardik Rawat
That’s. So the understanding should be that we should move towards 20% in the next one to two years. That’s correct?
Sanjeev Sancheti
Yes. I think that’s better.
Sanjay Lodha
That’s a good. And
Hardik Rawat
Got it. And so just wanted to understand that this would mean roughly 5 percentage points increase from the current mix. And this should come at the cost of other segments being our dominant segments, HPC and Private cloud of this should come they should probably sustain the 35% odd mix for both these segments and just should be on-top of that.
Sanjeev Sancheti
74%. And if you look at mathematics of it, 15 becoming 20 will not significantly change the other segments maybe 1% to 2%. Obviously it cannot — the total cannot be more than 100%. So it will take it from somewhere, right. We’re sitting now and plan to envision in the next two years 55%, 10% comes to be very difficult.
Sanjay Lodha
And the base is also increasing.
Sanjeev Sancheti
It’s also increasing. So overall numbers will increase, but whether that 5% increase in share by these two segments or some other segments, it’s a small percentage. I think it’s to get into that kind of precision on —
Hardik Rawat
No, I get there. I’m not asking for a precise number, what I’m trying to understand, let me put it another way. So we are basically projecting 35% to 40% blended revenue growth, right? So for the — for HPC and private cloud, we expect these two segments to go in-line with the blended revenue growth and AI enterprise stations to slightly grow ahead of it. That’s right.
Sanjay Lodha
Actually overall growth, which we are committing 35% to 40% RP, that will be maintained actually. So this year also, if you really see, what happened is that though we were able to maintain the 35% for both the segments and the AI was somewhere around less than around 10% or 11% last year, it went to around 15%, okay. So basically we are — you can understand that we are — and we are consistently growing at 40% CAGR almost. Only it is visible to you. So basically in that process, definitely AI will contribute, but I will not like to commit to the market anything beyond 35% to 40% of CAGR growth at this point of time.
Hardik Rawat
Got it. Got it, sir. Sir, another key standout in our overall revenue performance has been the HCS focused software and service vertical, which has grown quite sharply to about INR45 crore INR46 odd crores in FY ’25. This was a jump from roughly INR18 crores which you did in FY ’24 Any specific reason of this jump? Is it in relation to the execution we’ve done in HPC and private cloud?
Sanjay Lodha
Yeah. No, basically, actually this is not that a — we are not a software or services company. Okay, very clearly. But basically what happens is that since our base is growing, we definitely get some better support contracts and services contracts also from largely we primarily pick and choose those, wherein where we have some kind of a good expertise like oil and gas, there are some large basically oil and gas companies who look for some specified kind of HPC services and all those kind of things which we provide. So definitely this will remain in this range only. I personally don’t see that basically it will be growing. Our major focus is primarily the three top segments actually and that will remain that way.
Hardik Rawat
Got it, sir. Another question was with regards to our revenue position. So we are projecting a 35% to 40% CAGR. Basis this, if I assume the upper-end of the guidance, we hit about INR2,250 crores of revenue in FY ’27. Now in our last conversation, the capex that we’ve done was good for about INR2,000 odd crores of turnover. So do we envision any another leg of capex somewhere towards the end of FY ’27 or FY ’28.
Sanjeev Sancheti
I wouldn’t say that we will start putting the money, but maybe towards the end of ’26, ’27, we may have to start planning for something for the future growth. But that again. The asset turn is 20 times. So we shouldn’t worry about the capex, because it’s going to be nothing significant in any case.
Sanjay Lodha
Well, we have all of the best asset turnovers in the industry if you really see that.
Hardik Rawat
And my other question was with regards to cash conversion. So you know we were expecting about a 50% to 55% OCF to EBITDA conversion for FY ’25. However, as opposed to that because of higher working capital intensity seems like our OCF for the year has been negative. Are there any one-offs in this? How do you expect this to evolve in the future? Or is it just additional inventory stocking considering that you expect?
Sanjeev Sancheti
This is a good question because it comes every — every in every call. See this is a problem of growth. If I’m going to grow at 50%, 60% at close to 60%. Now our debtors are standard debtors and anti-bay. In fact, we have done very well to be keeping it below 90, okay. And inventory we have to carry because we are into such business where there are certain items which are very critical. So we don’t expect our cash conversion cycle to improve anywhere significant from where we are. We believe it will be in the range of like 70 to 90 days. And hence, if we continue to grow at, let’s say, 50%, 60%, then obviously a chunk of the revenue will get invested into working capital and — but as the growth smoothens to 35% 40%, then you will start the cash coming back. So this is typically a problem of growth. The good part about this is that and this is something which I must clarify that the quality of the capital cycle is extremely good. We have almost negligible, let’s say, bad debt and aging is also very cautious. So we — these will all get converted because we are growing so fast, because our large quarters tend to become so heavy that a lot of it is to be received. And I think that’s — but we believe that at 35% 40% we will be cash-positive definitely. But if you grow it, if you grow it higher than that and we cannot at all guiding, then obviously a part of that growth will get invested in the in the working capital cycle.
Hardik Rawat
So right now going-forward, at least in the next two to three years perspective, know, in terms of our priority, does a cash conversion come into that list of priorities or do you prioritize growth first and possibly at the risk of our operating cash-flow conversion.
Sanjeev Sancheti
So I don’t think risk of — it’s a mathematic number. I don’t believe to Call-IT as a risk or because our quality of cash-in the cycle is extremely good and I’m sticking our neck out to say that. But you tell me, if you or me, would you sacrifice growth for the kind of business that we are to get a better cash-flow cycle? I mean, the jury is out on this, you can
Sanjay Lodha
The amount of cash we have actually is not a limiting factor for us at all. And primarily, we want to grow and we want to maintain our — because basically understand we are a Make in India company, okay, we are doing — we are doing lot of innovative work basically in the country itself, which basically we are only competing with the MNCs. So that is basically giving a very good leader to the company on the high-performance domain. So basically that is generating those kind of in the country. So basically, I think growth is very important for us. Our margins are good, our growth has been consistent. So I think basically, I don’t think cash is anyway limiting or we would never like to limit our growth for cash. I don’t think cash is any limiting factor.
Sanjeev Sancheti
And also while you know from an accounting perspective, you are seeing a cash-flow cycle where it is, but we are sitting on INR120 crores cash today.
Sanjay Lodha
Yeah, that was just to highlight,
Sanjeev Sancheti
One in terms of
Sanjay Lodha
The cash-flow from operations has been close to INR65 crores,
Sanjeev Sancheti
Which we’ve already highlighted, which we have already highlighted.
Hardik Rawat
All right. I think I’ll get back-in the queue for more questions. Thank you.
Operator
Thank you. The next question is from the line of Akshay from AK Investment. Please go-ahead.
Unidentified Participant
Hello. Hi, sir. Congratulations for the excellent set of number for Q4 and FY ’25. My first question is for the EBITDA margin that we are guiding for 13% to 14% EBITDA margin. But logically, if we see we understand that our customers are high-end enterprise customers and we have to give them some value of our products and cost-effective. So you son. But if you think logically, then we are growing at 40% 30% and if our cost — all other costs remains same, naturally our EBITDA margin should increase. So why are we being conservative on that front?
Ankit Kumar Singhal
So I’d like to tell you that as we have been telling that we are consistently charging our customer in a very wide manner. So, okay, so the operating EBITDA that we have been guiding is 13% to 14%. There is a room of operating leverage, which can improve the margin by 30 to 40 basis-point in next year, which we can expect.
Sanjay Lodha
And plus, basically, I would like to make a note here. If you see my competition actually which is primarily MNC, we are all on a single-digit margin, whereas basically we are at 15% of this kind of margin, which is much better than my competition. So we are very comfortable in that and plus basically I don’t want to — I’ll go — because all my customers are enterprise customers and I have a lot of repeat business with my customers. So I give them value-for-money, okay. And basically, I think the margins which we are charging is really adequate and really good and that is helping us so as to maintain our growth and basically customers come — comes to us for repeat business for different segments also. So basically, I think that’s the strategy we have been working upon for year-on-year and we’ll still continue doing that because we have to check what kind of basically the margins of our competition has. Competition is already on single-digits. So we feel we are already in a very, very comfortable set of margins.
Unidentified Participant
Okay. Okay, sir, very well explained. And sir, my second question is on the funnel. Currently, we have the order funnel of around INR4,000 crores. So does it include the opportunities from India AI Missan and also the regional large language model that we are IT minister is talking so that these include all these opportunities
Sanjay Lodha
Basically I can only answer partially to this AI mission is not included in my colour yet.
Unidentified Participant
Okay. Okay, sir. And this order book, does it include the older segments or only it includes the high-performance computing?
Sanjay Lodha
All these segments, all these segments.
Unidentified Participant
Okay. Okay, sir. Understood. Thank you so much for answering my questions.
Operator
Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go-ahead.
Sandeep Shah
Yeah thanks for the opportunity and congratulations on a great show. Just on the, the product or the solution which we have launched for the GPU-based architecture. So can you throw some light in terms of this is a first-of-its-kind of products or there are competitors who have already launched these kind of products?
Hirdey Vikram
Good. Thank you, Sandeep, for your question. So is something which is which is a product on which we are working for very long and now this has come up and it’s a — it’s a proud movement for us because this is something which is competing with some of the MNCs actually. Overall, if you see as such a single-product available in the market, which can compete with, I — we don’t find any such option available. But yes, with a combination of two, three different products, they can be a combination which can come near to. But the best part is that overall brings a lot of ease of usage on-table for customers. And definitely it’s a product. So this gives another factor for you know users to opt for that it brings you know, competitive advantage also on the table for customers to offer. So that way both the advantages are there. One is from technical aspect, it’s a very superior product. Second is that it competes with multi-license-oriented offerings available in the market. So that way, phase, it’s quite well-placed in the market and that is the reason the adoption of is increasingly going up and up in the market and that’s the reason we are so buoyant about that our AI systems and the AI solutions will get the adoption of our AI system will go up and up with coming into picture.
Sandeep Shah
Okay. And just a follow-up with the compute innovation on the rise through announcement as well as some other announcement from the US, is it the decision-making from the client in terms of spending on the hardware opex capex to implement the AI architecture is getting delayed because they are — maybe also confused in terms of the cost of the operation, whether to put it now or may differ it by three to six months or one year.
Sanjay Lodha
So basically, I will ask — I’ll answer it partially and maybe then can add-on. So basically you know that as I have been mentioning again and again and it is visible basically from the market dynamics today, the has rather opened lot of opportunities for us. Okay. What is happening is that previously — basically what I’m seeing is that I’m seeing the reverse trend. After deep, definitely if you see the India LLM story has started, India government started basically to build the models for India itself.
So basically, people who were thinking that they cannot help build fundamental models, they also started thinking of building their fundamental model. So all that definitely increases the demand for AI compute exponentially actually. And basically same way for the application developers, previously there was one large compute in the data center, which everybody was trying to use. But basically since we are able to use GPU resources optimally, I think every department wants to have their own separate compute. So basically rather than a situation wherein this will really make customers confused, I think customers are about it and they are trying to basically get more-and-more adoption of AI is going to happen. So I personally feel this is a very positive factor.
Can add all if you add something to add?
Hirdey Vikram
Yes, definitely. I think as sir has said that this is very clear. With the event of deep-sea, definitely adoption is going up and up and there is a reason for it that earlier those users who were trying to use — trying to take-out maximum performance out of limited hardware, they were not able to do so. But now with deep-see kind of LLMs or the other models there in the market, now users are able to take-out maximum performance out of existing hardware and they are even now thinking of scaling their existing hardware to next level as well. So that way that options. And that is the best part about it.
And just to share with you,, that is something which is ultimately helping such users only. Because you see the way we have, you know, made you know, the way traction is building around, this is especially for users like you know, those customers who were earlier on deep or other LLM that they want to focus on the AI-related activities instead of learning the hardware, et etc. So that all that problem is getting resolved or solved by AI. So that way the adoption is going up and we are also building our solutions, which can ultimately increase the adoption.
Sandeep Shah
Okay. Okay, fair enough. Just a follow-up question to what Sanjesh sir has said. The pipeline does not include the AI opportunity from India. Any reason for that? Why? Because this has already been officially launched more than one year.
Sanjay Lodha
So basically the reason is that what is happening is actually as you know that we are always very reasonable in basically showing our pipeline and because it’s much more mature business. So basically once the — once the RFP is just about to be released or something of that nature, it will get reflected into the pipeline. But basically just when the RFP is still few months away, we don’t like to basically include it into the pipeline, okay? And since it’s a large opportunity, so we don’t want to basically make our complete projection skewed.
Sandeep Shah
Okay. So sir, in that scenario, once the RFP loan Sunday, the growth potential could be even higher than, 35% 40%.
Sanjay Lodha
We all wish for that. You are well wished. So you will also wish for that. I know that. Okay, okay. And the same, 35%, 40% only.
Sandeep Shah
Okay, okay. And Ankit you in your remarks to the previous question, I said if growth continues at 35 40 or even higher, 30 to 40 bps of operating leverage is possible on a Y-o-Y basis.
Ankit Kumar Singhal
Yeah, correct, correct.
Sandeep Shah
Okay. And if I can squeeze the last question, in terms of export opportunities, the 5% to 7% of top-line which export forms, this is for the full-year of FY ’25 and we expect this to remain at current level in the coming years. That means export business may keep growing at a company average growth rates.
Ankit Kumar Singhal
Okay. So as we have been guiding that we will gradually work on exports and it will likely to remain consistent and might go 1% higher, let’s say, to —
Sanjay Lodha
So basically, the domestic demand is very-high actually, Sandeepji, you know that very, very well, okay? It is very-high. So basically really speaking, as we committed to the market, we will do exports. So we started doing it, it’s around 5%, 5% to 6% currently. It will remain that and maybe it can go marginally a little bit higher, but I would not like to guide anything beyond that for exports.
Sanjeev Sancheti
So I will just like to add here, Sandeep, the problem is growth again. See, if even if we are at 5%, 6%, we are still growing at 40%, 40%, right? So I mean, it’s not easy to increase market-share when the company is growing at these rates or the share because everything is growing at that rate. So
Sandeep Shah
Okay. And just a last thing, Ankit, I think there has been a significant improvement in FCF generation in the second-half over first-half. So do you believe it can sustain periodically in terms of FY ’26, FY ’27 or do you believe the skewness may continue to remain where H2 better than H1?
Sanjay Lodha
Can you repeat your question again?
Sandeep Shah
Yeah, on the FCF generation, the second-half FY ’25 FCF generation has been really materially better versus first-half. So whether this trend of OCF2 EBITDA and FCF 2 PAT in the second-half, what we have reported may continue in a small range going-forward. So what are the changes we have implemented to improve the FCA?
Sanjeev Sancheti
So I think the endeavor, Sandeep was always to get as much cash-back into the business, you see our standard terms of credit with the customers is 90 days because they are very large customers. We’ve somehow been able to push and get a repayment because when it is 90 days is maybe 90 days, it can become 95 days, 100 days. So we have been able to pushion that it may be possible, sometimes it may not be possible sometimes. So I mean that’s why I’m giving a range of 80 to 100 days of cash credit cycle. When it is 80 days and you will have very large cash conversion, some quarterly if it is 100 days, then the cash conversion may be very — it will be less. But as long as my cash conversion — my credit days are quality credit days, I shouldn’t be worried about that. Okay. Endeavor is money as fast as we can because inventory towards your hand over system.
Sandeep Shah
Okay. And last thing, because we are growing fast, our base is increasing, we are already approaching 115 gig annualized revenue in FY ’25. So in the pipeline, you believe now the focus would be more on mega deals, larger deals because that will help us to keep growing at a higher-rate. And in pursuit of going behind larger deals, mega deals, there will be some margin competitiveness, which we have to follow because of the higher competition.
Sanjay Lodha
Actually, really speaking, we have — we focus on customers, not the deal size actually, because if you see all our customers are very important customers. So the names are more important for us. If it’s a large customer and if it’s a prominent customer with smaller deal, we’ll run for that. So it will always remain basically in that way. But that’s the reason we are guiding around 13% to 14% of margin actually going-forward. So I think that we’ll be easily able to maintain,
Sanjeev Sancheti
Yes. Keeping in mind all kinds of businesses which will come during the year.
Sandeep Shah
So thank you, all the best.
Operator
Thank you. The next question is from the line of Nikhil Porwal from Perpetual Capital. Please go-ahead.
Nikhil Porwal
Yeah, hi. Thank you and congratulations on a strong set of numbers. I’m fairly new to the company. Most of my questions have already been answered, but I just wanted to know one bit about — you’ve mentioned several times your margins are far higher than your peers, which are mostly NMC. Can you mention about the driver of these higher margins? What’s driving the higher margins?
Sanjay Lodha
Good question actually. So basically, welcome to understand — for understanding network better. So basically, we are a completely integrated — we do full stack actually. We design our products, we manufacture our products, we — our hardware is completely designed and manufactured by us. And then we have our own software stack. We have our R&D like basic supercomputing, they basically we have our own hardware, we have our own software stack for cloud, we have our own hardware, own software, plus the services stack. So it’s all very well-integrated, whereas our competition situation, either they are hardware or software companies that they do bundling together, whereas in our case, it’s completely end-to-end and the complete solution comes up. So that really helps us so as to basically command better margin in the market. That’s the most precise sums I can give you at this point of time.
Nikhil Porwal
Understood. Understood. And just adding to that, you all also — does this business also include some element of managed cloud service?
Sanjay Lodha
Negligible almost all.
Nikhil Porwal
Okay. And will it be right to assume that the software side of the business, which again is built in-house, commands a far higher-margin than the hardware side? I mean of course, both of them go together as a product. But
Sanjay Lodha
Yeah, so basically, yeah, you’re right, it goes together as a product. We don’t sell our software separately, whatever it is, we always sell it as a solution, like basically we sell a supercomputer that’s hardware plus software together and the software revenue doesn’t get basically mentioned in our books, in your invoice actually the is a product. Samely basically for our private cloud also, same way for our AI also.
Nikhil Porwal
Got it. Got it. Sure. Thank you so much.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of from Swan PMS. Please go-ahead.
Debashish Mazumdar
Good evening to the management team. Thank you so much for taking my question. Sanjay, having the consistent performance. Congrats for that. So I have two questions, which is basically a follow-up what Sandeep was asking. So the first question is around. Just wanted to understand who is the ultimate user of this product?
Hirdey Vikram
Will be — it will be the data center companies or the hardware providers or the ultimate enterprises, who will be the ultimate user of this product? Okay. Question-answer is is a product which cuts across all the verticals, irrespective of whether you are a standalone system user or you are a large DC pro CSP or you are a — you’re an enterprise who are trying to put in in-house AI driver cloud. So this is something which is helping all the organizations. The reason for that is that as a product is basically serving all three stages of AI process. One is development, second is training and third is inference. And on-top of it, it basically serves you with a single unified stack, which basically gets you the resources managed in a way better way, much better way. So that way, it’s a product which is designed for all the users who intend to use AI infrastructure.
Debashish Mazumdar
Okay. So if I understand correctly, you are also competing with, let’s say, companies like ETE Networks who are also a similar kind of business or it’s a very different proposition altogether.
Hirdey Vikram
No, no. Basically, we are not a CSP. We are not basically cloud service provider. Instead, we are the complete solution provider. So CSPs can become a customer to us and they may basically be using our solution. There is a possibility, but it’s not the possibility that we may be competing with those because they are just the service providers, whereas we are the solution providers and they can be our customers. Enterprises can be our customers, standalone users can be our customers. That way we don’t compete with them.
Debashish Mazumdar
Okay, understood. So in that case, we are competing with the global MNCs. Is it like that?
Hirdey Vikram
Yeah. We are sitting with local MNCs only. And that too, in their case, I mean our offering stands out in a very different way. Reason being, as I explained initially that we have got a single unified license, which basically serves the purpose, whereas competition has got they have to have two or three different type of licenses in order to meet the functionality and near to come near to our offering. So that ways we are very well-placed.
Debashish Mazumdar
Okay, understood. And the second question is again around the order pipeline. So if you see the pipeline Y-o-Y growth is around 15%. Now I understand that there are few things obviously around DI or something which you have not included in the order pipeline. So just trying to get some sense, is our — is it — when we are guiding for like 35%, 40% kind of growth, is it like we are seeing our conversion from our order book-to-revenue has improved significantly Y-o-Y and that’s why we are confident of this kind of growth or otherwise the deal structures are — would be very, very different going-forward, which is giving us despite 15% order pipeline growth Y-o-Y, the revenue growth expected to be 35%, 40%.
Sanjeev Sancheti
Historically,, historically our conversion has been 60%. Okay, currently the pipeline generally, if you look at the pipeline, this is largely will be government orders because largely government order, because most of the private segment orders get converted very immediately. They are not like a similar structure as a government business would be now on a INR3,971 crores, if it is a 61% conversion and this is excluding the L1N order book, you will be able to figure out that this is reasonably enough for my next one, 1.5 years of business. So this keeps on growing.
Sanjay Lodha
And just to clarify one more thing, order book is 100% convergent. Order book means is basically something is in the order book and that gets complete — even order book or L1 is 100% convergent.
Debashish Mazumdar
Yes,. So that’s why I was asking about the pipeline. But I got your — I got the answer. Just one follow-up is
Sanjeev Sancheti
The private segment orders which will come without the pipeline process is a straight come, right? Because
Debashish Mazumdar
In the pipeline, is it fair to fair to assume that our private segment pipeline, which is obviously not trackable because of the immediate conversion. There the traction is significantly high.
Sanjay Lodha
Yeah, you can say that, actually you can say that, but basically some part of some of private segment also gets reflected into this basically the gestation because they can try to understand basically designing solutions, these are high-end compute. This is not MOX product actually, really speaking. So basically if you try — if somebody wants to design a private clock, he will take some time to decide on that. Basically if you’re able to design it for him, then only the RFP will be in completely near flavor. And basically you’ll be able to deliver value-for-money to the customer. So that will take some time. So basically, that’s the reason — but still if you personally — I personally feel the gestation period for private orders is not that high, but for government orders, definitely it is higher. So some part of it is still there.
Debashish Mazumdar
Okay. One last follow-up. If I see the government revenue as a percentage of our overall business, it sowards around 50% 52%. So do you think going-forward, as you were rightly saying that private pipeline is improving, do you think that number will shift towards private because then my working capital requirement will change dramatically if my business shift more towards more private.
Sanjay Lodha
I will tell you, working capital requirement doesn’t get changed either government or private, let me tell you very clearly because my government payments sometimes I’m very — you’ll be astonished to hear government payments sometimes come faster than the private also because basically all my face is to large enterprise and they work on anti-day credit term, okay? So basically government sometimes even pays before that and my government is not the general government, it’s all government R&D and high-end enterprises. First — the first part of the question is that.
The second is that if you see my own quarterly results, if the government business has been hovering between 42% to 50%. So basically in the some quarters, you may see it will be 45% or something of that nature also. So what, it may be 40% to 50%. I don’t see it basically improving better than that because I’m seeing lot of — and this is not only one year or two year experience. This experience I’m sharing with you for at least three to five years. Basically, we have seen that basically we are able to maintain momentum and 50% — 40% to 50%, sometimes basically it becomes — the private becomes 60, sometimes 40 — sometimes 50, so it depends on that actually. So it will remain in that range.
Debashish Mazumdar
Understood, understood. Thank you so much for taking my questions.
Operator
Thank you. The next question is from the line of Saurabh Singh…
Sanjay Lodha
Will be happy to the last question because we are already
Operator
Okay. Yes, sir. I’ll make note of that. The last question is from the line of Saurabh Pratap from an Individual investor. Please go-ahead.
Unidentified Participant
Sir, congratulation and thanks for this opportunity. And sir, am I audible? Yes, sir. Sir, my question is rated with. How deep is our strategic tie-up with N media post-launch, are there any exclusive margin sale or co-development arrangement, sir?
Sanjeev Sancheti
I think the margin deals can’t be discussed on this call. These are all confidential business information, which we can’t discuss on the call.
Sanjay Lodha
And our relationship with NVIDIA is the OEM relationship. We are among the very few partners in the world who design and develop products for NVIDIA. So basically, that’s the OEM relationship which we have.
Sanjeev Sancheti
Okay. Thanks a lot. I think for the chorus call keep, can you please move on to the closing remarks because we are well-ahead of time now. If anybody is interested in asking any question, they can reach-out to us, us or the CFO subsequently.
Operator
As this was the last question, I would now like to hand the conference over to the management for closing comments.
Sanjay Lodha
Thank you so much thanks for the call. As basically mentioned by Sanjeev, in case anybody has questions, they can reach to our IR team. They will be glad to answer it and basically even our CFO also. So thank you for your confidence in. Thank you for attending this call.
Sanjeev Sancheti
Thanks a lot for attendance. Thanks IIFL for Chorus Call for ending this call. Thanks a lot. Have a great day.
Hirdey Vikram
Thank you, everyone. Thank you.
Operator
Thank you. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.