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The stock of high-end computing solutions provider Netweb Technologies India has soared 80% in the past six months. In September the company bagged two orders for servers and artificial intelligence (AI) systems worth ₹2,184 crore.

As Nvidia’s sole original equipment manufacturer (OEM) partner in India, Netweb has a clear edge – it gets access to Nvidia’s latest products 12-24 months before the rest of the industry, according to ICICI Securities. With this, Netweb has surpassed its medium-term revenue growth guidance of 35-40%. Revenue grew at a more than 60% compound annual rate between FY23 and FY25, beating the industry.

Through technological partnerships with Nvidia, AMD and Intel, Netweb has acquired a distinctive R&D edge in three key segments – high-performance computing (HPC), AI systems and workstations, and private cloud hyper-converged infrastructure (HCI). Its pricing power as India’s only full-stack solutions provider for high-end computing solutions has helped keep margins above those of its competitors in the electronics manufacturing services industry. Lately, Ebitda and profit-after-tax margins have been around 13-14% and 9-10%, respectively.

Netweb also stands to benefit from government support through IndiaAI and the National Supercomputing Mission, which have a combined outlay of ₹14,800 crore, as well as, the government’s push for data localization through the Digital Personal Data Protection (DPDP) Act. Netweb has also bagged production-linked incentives to manufacture IT hardware, and telecom and networking products.

But risks linger. There is growing interest in data centres from global tech giants, which have committed $70 billion towards building these in India, but data centres account for only 3% of Netweb’s revenues. Rising competition in HPC, private cloud HCI and AI, which together account for 85% of Netweb’s revenues, could hit growth and margins. Large deals, including strategic orders from IndiaAI, are also expected to be margin-dilutive.

Moreover, despite marquee clients, growth in Netweb’s key segments has slowed meaningfully from 154% in FY22 to 61% in FY25. ICICI Securities’ projections price in 59% CAGR growth between FY25 and FY28, which leaves little room for misses. Netweb saw operating revenue grow 51% year-on-year in H1FY26, which spooked investors, triggering a 20% correction in the stock since 1 November.

With 70-75% of Netweb’s supercomputing segment and 43% of overall revenues dependent on the government, the company is vulnerable to lumpy order wins and working-capital strain. This is further exacerbated by increasing client-concentration. The top five customers now account for more than half of Netweb’s revenues. Also, its cash conversion cycle increased to 120 days in Q2FY26.

The stock’s valuation, at 47.5 times FY27 earnings based on Bloomberg consensus estimates, therefore appears demanding.

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