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Netweb Technologies India Limited — Q2 FY26 earnings call

Call held 3 Nov 2025

Management summary

Netweb Technologies delivered strong Q2 and H1 FY26 results, driven by significant strategic order wins and robust growth in its AI segment. The company maintained its organic growth guidance of 35-40% CAGR and healthy EBITDA margins, supported by its differentiated end-to-end solutions and strong R&D capabilities. Despite slightly lower margins on strategic orders, management emphasized their risk-free nature and secured working capital, reinforcing confidence in future growth.

Highlights

  • Operating income for Q2 FY26 increased 21% YoY to INR 3,037 million.

  • PAT for H1 FY26 grew 49.5% YoY to INR 619.1 million, with a 10.2% margin.

  • Robust organic order book of INR 4,939 million as on September 30, 2025, plus a pipeline of INR 4,000 crores.

  • Confirmed organic growth guidance of 35-40% CAGR for the next couple of years.

  • Strategic OEM partnership with NVIDIA ensures sufficient chip allocations and streamlined supplies.

Concerns

  • Strategic orders carry slightly lower PBT margins (150-200 bps lower) compared to regular business.

  • Cash conversion cycle increased by 9 days to 120 days as of September 2025, primarily due to reduced payable days.

  • Supply chain challenges for strategic orders could cause minor delays (month or two).

Key financials

2 periods

Q2 FY26

  • Operating Income
    3,037 Mn
    YoY +21%
  • Operating EBITDA
    454.6 Mn
    YoY +25%
  • Operating EBITDA Margin
    15%
  • PAT
    314 Mn
    YoY +20.1%

H1 FY26

  • Operating Income
    6,049 Mn
    YoY +51.1%
  • Operating EBITDA
    903.2 Mn
    YoY +60.6%
  • Operating EBITDA Margin
    14.9%
  • PAT
    619.1 Mn
    YoY +49.5%
  • PAT Margin
    10.2%
  • Return on Equity
    22.4%
  • Return on Capital Employed
    30.2%

What they filed

Q1 FY27: revenue up 172.4%, net profit up 183.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue251 334 415 301 304 +21%805 +141%774 +87%820 +172%
EBITDA36 43 59 45 45 +25%98 +128%97 +64%121 +169%
Net profit26 30 43 30 31 +19%73 +143%71 +65%85 +183%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹4,939 Mn

as of 2025-09-30 quantified

Inflow this quarter

₹21,840 Mn

Execution

1/3 of strategic orders (approx INR 7,000 million) to be executed in FY26, balance in FY27. Normal order cycle is 12-16 weeks, gestation period 6-18 months.

Pipeline

deal pipeline tcv

Organic pipeline, excluding strategic orders

Order book is not lumpy; organic business is consistently growing, fueled by refresh cycles and a high repeat customer base. Strategic orders are risk-free and LC-backed.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    For the large strategic order, no additional capital expenditure will be required.
  • Debt 0.0× EBITDA
    Our balance sheet strength is reflected by us being a 0 net debt company.
  • Liquidity Cash ₹2,379.8 Mn Net free cash as of September '25. Short-term working capital needs (LC-based) for strategic orders have been secured.
    The company had net free cash of INR2,379.8 million as on September '25. For the large strategic order, no additional capital expenditure will be required. Short-term working capital needs, primarily LC-based, have been already secured to ensure smooth execution.

Guidance & targets

Revenue

  • Organic Business Growth Revenue · next couple of years · High confidence 35-40%
    we are maintaining our organic growth guidance to 35% to 40% for the next couple of years. Is that understanding correct, sir? That is very right.

    — Sanjay Lodha, Chairman and Managing Director

  • Export Revenue Contribution Revenue · annually · Medium confidence 5-6%
    overall, we are guiding annually around 5% to 6% of our revenue from exports which was almost 0 two years back.

    — Sanjay Lodha, Chairman and Managing Director

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 13-14%
    And for the EBITDA, the guidance remains same, 13% to 14% as we will be transitioning to large scalable orders.

    — Ankit Singhal, Chief Financial Officer

  • PAT Margin Profitability · FY26 · High confidence 10-10.5%
    PAT margin guide is of 10% to 10.5%

    — Ankit Singhal, Chief Financial Officer

Order Execution

  • Strategic Orders Execution Order Execution · FY26 and FY27 · High confidence 1/3 in FY26, balance in FY27
    Some portion around 1/3 of these orders we expect to be executed in FY '26 because the total order is somewhere around INR2,100 crores approximately. So our expectation is INR2,10. crores -- out of INR2,100 crores, 1/3 should get executed this financial year and balance should get executed in the next financial year.

    — Sanjay Lodha, Chairman and Managing Director

Growth

  • Overall Growth Growth · next three years · High confidence 30-35%
    I will keep my growth at, at least 30% to 35% for at least for three years to come.

    — Sanjay Lodha, Chairman and Managing Director

What to watch in Q3 FY26

Strategic Order Execution Progress

Next quarter / FY26
Current 1/3 (approx INR 7,000 million) targeted for FY26
Target Progress towards 1/3 execution by FY26 end

Why it matters

Crucial for validating revenue growth from large strategic wins and assessing execution capabilities.

Some portion around 1/3 of these orders we expect to be executed in FY '26 because the total order is somewhere around INR2,100 crores approximately. So our expectation is INR2,10. crores -- out of INR2,100 crores, 1/3 should get executed this financial year and balance should get executed in the next financial year.

Risks & concerns

  • Supply chain challenges for strategic orders

    medium

    Delivery and other challenges, supply challenges can make things move from a month or two up and down for strategic orders.

    Management acknowledged

  • Slightly lower margins on strategic orders

    medium

    Strategic orders are 150-200 basis points lower at PBT level compared to regular business, though still considered healthy and sustainable.

    Management acknowledged

  • Increased cash conversion cycle

    low

    Cash conversion cycle increased by 9 days to 120 days due to reduction in payable days from 84 to 70 days, though receivable days also improved.

    Management acknowledged

Q&A highlights

8 direct
Margins on large strategic orders Direct
However, we are keeping and maintaining very healthy and sustainable margins. They can be like 150 to 200 basis points lower at PBT level.

Clarifies the profitability profile of the newly won large strategic orders, indicating a slight dilution to overall PBT margins but still healthy.

Asked by CA Garvit Goyal

Revision of FY26 guidance post strategic orders Direct
So there is no revision in the guidance. We are maintaining 35% to 40% growth for the regular business and strategic orders are being informed separately. And for the EBITDA, the guidance remains same, 13% to 14% as we will be transitioning to large scalable orders.

Confirms that the existing organic growth and EBITDA margin guidance remains unchanged despite the large strategic wins, providing clarity on management's expectations.

Asked by Anand B

Execution timeline for strategic orders Direct
Some portion around 1/3 of these orders we expect to be executed in FY '26 because the total order is somewhere around INR2,100 crores approximately. So our expectation is INR2,10. crores -- out of INR2,100 crores, 1/3 should get executed this financial year and balance should get executed in the next financial year.

Provides a clear breakdown of when the significant strategic orders will translate into revenue, crucial for financial modeling.

Asked by Anand B

NVIDIA chip supply and OEM partnership Direct
So basically, as you know that we have a very strategic relationship with NVIDIA. We have an OEM partnership with NVIDIA... So we have sufficient allocations... we get due priorities from NVIDIA and our supplies are quite basically much more streamlined even the days when GPUs were under acute shortage.

Addresses a key industry concern about chip availability, highlighting Netweb's strong relationship with NVIDIA as a competitive advantage.

Asked by Prateek Singh

Working capital requirements for strategic orders Direct
we are receiving sufficient advance to have the cash accrual for these particular execution. And these are also LC-band transactions. So we are we have secured the LC bank limits to do the smooth execution of these projects... So we don't feel there are any financial challenges as such.

Reassures investors about the funding and risk management for large government-related orders, mitigating concerns about extended receivable cycles.

Asked by Vibhor Singhal

Order book lumpiness and repeat customer base Direct
I contradict you, my order book -- basically, my business is not lumpy at all actually... if my business was lumpy, then I wouldn't have a 75% plus repeat customer... We do not chase annuity revenue. We do not chase repeat revenue. We target refresh cycles.

Clarifies the nature of Netweb's business model, emphasizing its stability and recurring revenue potential through refresh cycles rather than lumpy, one-off projects.

Asked by Sumeet Jain

Private Cloud offerings and differentiation Direct
we provide the complete private cloud stack, but we don't render cloud services... comprising of the complete hardware, the middleware and the cloud stack, which we integrate with the end customer utilities... we basically do not need any commercial virtualization software in order to deliver this solution.

Explains Netweb's unique value proposition in the Private Cloud segment, highlighting its integrated, software-defined approach as a key differentiator against competitors.

Asked by Bharat Gulate

R&D investment and capitalization policy Direct
we spend around 3% of our turnover primarily into the R&D... we do not capitalize any R&D costs. So primarily, it's been the people cost, software required for the R&D, a lot of testing equipment goes. All these are expensed off in our P&L, we do not capitalize it.

Provides insight into the company's R&D strategy and accounting practices, indicating a conservative approach that fully expenses R&D, which supports sustained innovation.

Asked by Sumeet Jain

2 min read 6 chapters

Detailed narrative

Strong Q2 & H1 FY26 Financial Performance

Netweb Technologies reported robust Q2 FY26 results with operating income up 21% YoY to INR 3,037 million and PAT growing 20.1% YoY to INR 314 million, achieving a 10.3% margin. For H1 FY26, operating income surged 51.1% YoY to INR 6,049 million, and PAT increased 49.5% YoY to INR 619.1 million, with a healthy EBITDA margin of 14.9%. The company maintained a 0 net debt position and held INR 2,379.8 million in net free cash as of September 2025.

Significant Strategic Order Wins and Robust Order Book

The company secured two large strategic orders totaling approximately INR 21,840 million, to be executed by FY27, reaffirming its position as India's largest OEM in high-end computing solutions. This is in addition to a robust organic order book of INR 4,939 million as of September 30, 2025, and an organic pipeline of INR 4,000 crores. Management expects about one-third of the strategic orders (approx. INR 7,000 million) to be executed in FY26, with the balance in FY27.

AI Segment Growth and Strategic Focus

The AI segment demonstrated impressive growth, with its revenue contribution rising from 14.7% in H1 FY25 to 25.4% in H1 FY26, reflecting a 160% growth. Management emphasized strong tailwinds from government spending on AI and India's ambition to become an 'AI factory,' positioning Netweb to capitalize on this demand with its NVIDIA OEM partnership and latest chipset-based products. The company's other segments, HPC and Private Cloud, still contribute over 70% of business and are growing at 35% each.

Consistent Growth Guidance and Profitability

Netweb reiterated its organic growth guidance of 35-40% CAGR for the next couple of years, with a commitment to deliver on promises. EBITDA margins are expected to be maintained in the 13-14% range, even with the transition to large scalable orders which carry slightly lower PBT margins (150-200 bps lower). The company's R&D strength, with approximately 3% of turnover invested and fully expensed, is key to retaining margins and competitive differentiation.

Operational Efficiency and Capital Structure

The cash conversion cycle increased by 9 days to 120 days as of September 2025, primarily due to a reduction in payable days from 84 to 70 days. Management highlighted that strategic orders are LC-backed with sufficient advances and secured LC bank limits, mitigating financial challenges and credit risk. The company's asset-light model and focus on capability-driven growth, supported by a growing employee base (from 240 to nearly 600 since IPO), mean no additional capex is required for the large strategic orders.

Market Positioning and Product Differentiation

Netweb differentiates itself by building complete end-to-end compute solutions with its own software stack, rather than being 'box pushers' or selling annuity services. This integrated approach, including solutions like Skylus.ai, allows them to offer superior value and maintain healthy margins compared to competitors who bundle separate hardware and software components. The company currently holds a 30-35% market share in its addressable supercomputing market of INR 1,000 crores.

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