Netweb Technologies India Ltd (NSE:NETWEB) Q4 2025 Earnings Call Highlights: Record Growth and ...

GuruFocus News

Tue, May 6, 2025, 1:02 AM 4 min read

Operating Income: INR4,147 million in Q4 FY25, up 55.9% YoY; INR11,490 million for FY25, up 58.7% YoY.
Operating EBITDA: INR597.7 million in Q4 FY25, up 47.9% YoY; INR1,600.1 million for FY25, up 56.1% YoY.
Operating EBITDA Margin: 14.4% for Q4 FY25; 13.9% for FY25.
Profit After Tax (PAT): INR429.9 million in Q4 FY25, up 45% YoY; INR1,144.8 million for FY25, up 50.8% YoY.
PAT Margin: 10.3% for Q4 FY25; 9.9% for FY25.
Return on Equity: 24% for FY25.
Return on Capital Employed: 32.6% for FY25.
Net Debt: 0 net debt company with net free cash of INR1,621.3 million as of March 31, 2025.
Cash Conversion Cycle: Improved to 73 days in Q4 FY25 from 88 days in Q3 FY25.
Cash Flow from Operations: INR655.04 million for Q4 FY25.
Dividend: Final dividend of INR2.50 per equity share, representing a 125% dividend on the face value of INR2 per share, subject to shareholder approval.
AI Revenue Contribution: 14.8% to revenue with 112% YoY growth in FY25.

Warning! GuruFocus has detected 3 Warning Signs with NSE:NETWEB.

Release Date: May 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Netweb Technologies India Ltd (NSE:NETWEB) reported its highest ever income and PAT for Q4 FY25 and the full fiscal year 2025.
Operating income rose by 55.9% year-on-year for Q4 FY25 and by 58.7% for the full fiscal year, reaching INR4,147 million in Q4 and INR11,490 million for the year.
The company received its first claim under the PLI Scheme 2.0 for IT Hardware, amounting to INR59.4 million, highlighting its success in boosting domestic production.
Netweb Technologies India Ltd (NSE:NETWEB) launched Skylus.ai, a unified solution for GPU-based AI infrastructure, marking a significant step in strengthening its leadership in AI systems.
The company has a strong order book and a robust business pipeline, positioning it well for sustained growth and continued technological leadership.

Negative Points

Despite strong growth, the company's cash conversion cycle remains a challenge, with a cycle of 73 days in Q4 FY25.
The company faces intense competition from MNCs, which operate on single-digit margins, while Netweb Technologies India Ltd (NSE:NETWEB) maintains a margin of around 14%.
The export business remains a small portion of total revenue, at 5% to 7%, with limited growth expectations in the near term.
The company's growth strategy may require additional CapEx towards the end of FY27 or FY28 to support future expansion.
There is a risk of margin pressure as the company pursues larger deals and maintains competitive pricing to capture market share.

Q & A Highlights

Q: What are the key drivers for the AI segment, and where do you see this segment in the next three to five years? A: Hirdey Vikram, Chief Marketing and Sales Officer, explained that AI is becoming a crucial vertical for Netweb Technologies, with significant growth potential. The demand is driven by both enterprise and government sectors, particularly due to the increasing need for local LLMs. AI is expected to become a fundamental base for various sectors, contributing significantly to revenue in the coming years.

Q: What percentage of revenue is AI expected to contribute in the next three to four years? A: Sanjay Lodha, Executive Chairman and Managing Director, stated that AI currently contributes around 14.8% to revenue and is expected to grow to approximately 19% to 20% by the end of the year, given the company's overall growth rate of 35% to 40% CAGR.

Q: Can you explain the nature of the patents applied for and their impact on the business? A: Sanjay Lodha mentioned that the patents are related to existing areas of business, focusing on enhancing product lines. The company has a strong R&D team that develops unique features, which are then patented to secure their innovations.

Q: What is the expected revenue growth for the next two years, and how does the order book support this? A: Sanjay Lodha indicated that the company expects to maintain a growth rate of 35% to 40% CAGR. The order book, with a conversion cycle of 8 to 12 weeks and a pipeline of INR4,000 crores, supports this growth. The company has a conversion ratio of around 60% for its pipeline.

Q: How does the company plan to manage cash conversion given the high growth rate? A: Sanjeev Sancheti, Uirtus Advisors LLP, explained that the cash conversion cycle is expected to remain between 70 to 90 days due to the rapid growth. The company focuses on maintaining quality in its cash conversion cycle and expects to be cash positive at a growth rate of 35% to 40%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info