{"id":160794,"date":"2024-05-03T07:10:15","date_gmt":"2024-05-03T11:10:15","guid":{"rendered":"https:\/\/44.250.171.167\/?p=160794"},"modified":"2024-05-03T07:10:22","modified_gmt":"2024-05-03T11:10:22","slug":"netweb-technologies-india-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/netweb-technologies-india-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Netweb Technologies India Ltd. Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Netweb Technologies India Ltd. (NETWEB) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Achieved highest ever quarterly and annual income and profits.<\/li>\n<li>Operating income grew 115.5% Y-o-Y for Q4 and 62.7% for FY24.<\/li>\n<li>Operating EBITDA up 166.5% Y-o-Y in Q4, 46.4% in FY24 (INR 404 million in Q4, INR 1,025 million in FY24).<\/li>\n<li>Profit after tax increased 181% Y-o-Y for Q4 and 61.7% for FY24.<\/li>\n<li>Recommended dividend of INR 2 per share.<\/li>\n<li>Operating EBITDA margin 15.2% in Q4, 14.2% in FY24.<\/li>\n<li>PAT margin improved from 8.4% in Q4 FY23 to 11% in Q4 FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>AI Business Growth<\/strong>\n<ul>\n<li>AI system revenue grew 2.6 times Y-o-Y, contributing 11% to total revenue (7% in FY23).<\/li>\n<li>Positioned as the third pillar of growth for the company.<\/li>\n<li>Strong order book of INR 4,112 million for March 2024 (INR 712 million in March 2023).<\/li>\n<\/ul>\n<\/li>\n<li><strong>Partnerships<\/strong>\n<ul>\n<li>Manufacturing partnership with Nvidia for Grace CPU Superchip and GH200 Grace Hopper Superchip.<\/li>\n<li>Collaborating to produce over 10 variations of Tyrone range of AI servers.<\/li>\n<li>Targets enterprise challenges in building cost-effective AI infrastructure.<\/li>\n<li>Added 171 new customers in the fiscal year gone by.<\/li>\n<\/ul>\n<\/li>\n<li><strong>AI and Growth Opportunities<\/strong>\n<ul>\n<li>AI Systems emerging as third growth pillar, driven by GPU capabilities and software integration.<\/li>\n<li>Opportunities in supercomputing (National Mission), private cloud (data center growth), and AI adoption.<\/li>\n<li>Not focused on bare-metal data center servers, aim to bundle with private cloud software stack.<\/li>\n<li>AI business currently 11% of revenue, expected to grow to 15-16% next year.<\/li>\n<li>Projected to reach 30% of revenue in 4-5 years, matching private cloud and supercomputing segments.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Revenue and Margin Guidance<\/strong>\n<ul>\n<li>Targeting 30-35% revenue CAGR going forward, driven by strong order book.<\/li>\n<li>Margins sustainable at current levels (around 14-15% EBITDA margin), minor 50 bps fluctuation possible.<\/li>\n<li>No significant scope for margin expansion, aiming to maintain competitive pricing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Networking Switches Segment<\/strong>\n<ul>\n<li>Missed INR 200 million sales target for the year as product development was ongoing.<\/li>\n<li>Targeting top-of-rack data center switches, not volume segment.<\/li>\n<li>Product launched by end of last quarter, expect ramp-up in current year driven by data center growth.<\/li>\n<\/ul>\n<\/li>\n<li><strong>ORAN and Yotta Projects<\/strong>\n<ul>\n<li>ORAN solution still under development, not near commercialization.<\/li>\n<li>Expected to be ready by Q3 or Q4 of current fiscal year.<\/li>\n<li>Yotta announced large Nvidia chip order, but initial implementation smaller.<\/li>\n<li>Nvidia chips sourced directly by OEMs like Nvidia, not through Netweb.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Order Book Execution<\/strong>\n<ul>\n<li>Order book of INR 4,000 million expected to be executed in 4-5 months.<\/li>\n<li>Order cycle is 16-20 weeks on average.<\/li>\n<li>Win rate of 60-65% on qualified opportunities in the sales funnel.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Growth and Margin Outlook<\/strong>\n<ul>\n<li>Targeting 30-35% revenue CAGR, an aggressive but achievable target.<\/li>\n<li>Operating margin expected to improve by a few basis points initially.<\/li>\n<li>After 2 years, benefits of new plant to reflect in higher EBITDA and PAT margins.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Private Cloud Focus<\/strong>\n<ul>\n<li>Private cloud business contributes 30-35% of revenue, not a new focus area.<\/li>\n<li>Focus on solutions over bare-metal servers, aligned with industry shift towards private cloud.<\/li>\n<li>Private cloud enables better resource optimization and management compared to bare-metal.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Revenue Model<\/strong>\n<ul>\n<li>Target refresh revenue from existing customers after 3-4 years due to technology obsolescence.<\/li>\n<li>Provide perpetual licenses with multi-year support, reducing renewal needs.<\/li>\n<li>Targeting refresh vs. recurring revenue model as data centers need periodic upgrades.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Manufacturing Capacity and Capex<\/strong>\n<ul>\n<li>Capacity utilization not a metric, focus on building manufacturing capabilities.<\/li>\n<li>INR 35-40 crore capex planned (some incurred, some upcoming) to support up to INR 1,800-2,000 crore revenue.<\/li>\n<li>No major capex expected for next 2-3 years beyond routine 10% of gross profit.<\/li>\n<li>Invest in machinery, skills for high-end computing products, not contract manufacturing.<\/li>\n<\/ul>\n<\/li>\n<li><strong>L1 Orders and Conversion<\/strong>\n<ul>\n<li>About 100% probability of conversion from L1 to order book.<\/li>\n<li>Conversion time ranges from 2 weeks to 3 months maximum.<\/li>\n<li>Delay could be due to government approvals\/permissions process.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Rudra Project<\/strong>\n<ul>\n<li>Not involved in C-DAC&#8217;s Rudra supercomputer project.<\/li>\n<li>Focused on integrated solutions, not just hardware manufacturing, box pushing.<\/li>\n<li>Have good relationship with C-DAC but different approach from Rudra project.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Netweb Technologies India Ltd. (NETWEB) Q4 FY24 Earnings Concall Financial Performance Achieved highest ever quarterly and annual income and profits. Operating income grew 115.5% Y-o-Y for Q4 and 62.7% for FY24. Operating EBITDA up 166.5% Y-o-Y in Q4, 46.4% in FY24 (INR 404 million in Q4, INR 1,025 million in FY24). Profit [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[8192,12051,10169],"class_list":["post-160794","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-computer-hardware","tag-design","tag-earnings"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":161429,"url":"https:\/\/alphastreet.com\/india\/tracxn-technologies-ltd-q4-fy24-earnings-conference-call-insights\/","url_meta":{"origin":160794,"position":0},"title":"Tracxn Technologies Ltd Q4 FY24 Earnings Conference Call Insights","author":"Praveen","date":"May 21, 2024","format":false,"excerpt":"Key highlights from Tracxn Technologies Ltd (TRACXN) Q4 FY24 Earnings Concall Financials Q4 FY24 revenue from operations: INR 20.3 crores. 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