NetWeb Q3FY26 - AI Gale-winds from Govt Outlay

Q3 has been an unprecedented quarter for the company. Revenue growth patterns include:

• Revenue growth of 141% or 2.4X, on a YoY basis.
• The first nine months, 9MFY26, saw 92% growth YoY.
• TTM revenue is 1,825 crores compared to FY25 revenues of 1,149 crores.

The growth came primarily from an increase in revenue from AI systems. AI revenue for the first nine months saw an approximately 4X growth compared to the whole FY 25.

Other sectors have remained approximately flat when we compare the pro-rated figures for the first nine months and the last financial year.

The record revenue was primarily driven by Netweb successfully executing a large strategic order valued at ₹450 crores, reaffirming its position as India’s largest OEM in high-end computing solutions.

This can be both positive and negative since orders like these may not be available each quarter, and this would make it hard maintain the momentum. Therefore, it is better to look at TTM figures.

Operating margin decreases to 12.17% from the usual range of 14%-15%. This needs to be clarified with the management, and we will try to get on the con-call to clarify this, as the company has been expensing some R&D costs rather than capitalizing them.

On a TTM basis, the company saw a significant increase in revenues of about 59%. Operating margin is near 13.5%, primarily due to the low margin in the most recent quarter.