Netweb Technologies India Limited (NETWEB) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to NetWeb Technologies Ltd. Q4-FY26 Earnings Conference Call, hosted by ICICI Securities. As a reminder, all participants will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Seema Nayak from ICSA Securities. Thank you, and over to you, Ma.

Thank you. Good afternoon, everyone. On behalf of ICSA Securities, I welcome everyone to Network Technologies Q4FY26 on its call. We have the pleasure of having with us the Senior Management Team of NetWeb Technologies, led by CMD, Mr. Sanjay Lodha, full-time Director, Mr. Naving Lodha, CFO, Mr. Ankit Kumar-Single, Chief Sales and Marketing Officer, Mr. Ridley Vikram, Chief Strategy Officer, Nukul Sheria, and Head of Lotus Advisors, the IR Advisor to NetWeb Technologies, Mr. Sanjeev Sanjeev. So, without further delay, I'd like to hand over the clue to Mr. Sanjeev Sanjeev. Over to you, sir.

Thank you, Seema. Good afternoon to all the participants. Before I hand over the call to Mr. Sanjay Lodha for the opening remarks, I would like to draw your attention to the Safe Harbor statement in the early call presentation. I request each one of you to go through the presentation thoroughly before the Q&A starts so that you are aware of the same. Thank you and over to you, Mr. Lodha.

Thank you, Seema and Sanjeev. Good afternoon, and warm welcome to all of you to NetWeb Technologies' Q4 Financial Advertisement Call. We are pleased to announce that NetWeb Technologies delivered a landmark year with a revenue from operations reaching 21,836 million in financial year 26, reflecting a strong year-on-year growth of 90%. This record annual performance underscores the strength of our business model and accelerating demand for high-end computing systems in India. For Q4, financially at 26, revenue from operations stood at 7,737 million, growing at 86.6 year-on-year, demonstrating strong execution momentum as we close the year on a high note. Pat for the quarter stood at 706 million, representing 65.7% year-on-year growth, with a pat margin of 9%. For the full year, Pat stood at 2,058 million, up by 80.9% year-on-year, with a pat margin of 9.3%. These results reflect not just top-line momentum, but discipline margin sustained across our businesses. The defining highlight of financial analytics has been the performance of our AI segment, which grew by 459.6% year-on-year. This growth was a result of years of focus in-house R&D, enabling us to design and manufacture some of the world's most powerful latest-generation AI systems combined with discipline, planning, and execution of large, strategically significant national scale orders. AI Systems contributed 43.4% of our total operating revenue in financial year 26, a transfer transformational shift from a revenue mix that firmly positioned Our network at the center of AI infrastructure built out. The other two core segments, HPC and private cloud, continues to exhibit robust demand, reinforcing the breadth and resilience of our technology portfolio. The performance is a direct reflection of network's unwavering commitment to in-house design and manufacture of next-gen high-end computing systems. This fully aligns with global phenomenon of sovereign compute infrastructure, which is very well accessed by networks and countries making India a result. We take immense pride in creating significant impacts in strengthening India's emergence as a critical global hub for high technology manufacturing which will benefit the nation for decades to come. Beyond our own performance, we believe India stands at a threshold of generational opportunity in artificial intelligence. With the world's largest pool of digital users, a path measuring data ecosystem, a major boost to indigenous foundation models, and assistive policy momentum through India AI mission supported by Make it India, the country is supposed to emerge as one of the most prominent AI economies of the world. Pension to this wizard is government's clear focus on sovereign AI infrastructure, ensuring The compute, data, and model powering India's digital future is built, owned, and operated within the country. The build-out of indigenous AI compute is no longer aspirational. It is a strategic national imperative tied directly to economic competitiveness, data security, and technological self-reliance. As India's only full-stack domestic provider for high-end computing systems, Nesrub is uniquely positioned to power this transition. Our strategy remains firmly anchored on our key growth pillars, HCC, Private Cloud and AI systems, supported by our established technology leadership in high-end computing systems space for large-order pipelines. As we step into financial year 27, from a position of strength, with a firm order book of around 2100 crores and an L1 inclusive order book of 2400 crores, day 1 of financial year 27, we already have on our books more than what we had built for all of last year. We see a long runway of growth ahead. We remain committed to investing in R&D, manufacturing depth, and talent to ensure India's AI innovation are built on strong foundations, and that network continues to create durable, long-term value for all our stakeholders. I now request Ankit to take through the financials. Thank you.

Thank you, Mr. Loda. Good afternoon, ladies and gentlemen, and thank you for joining our earnings call. Before we open the floor for Q&A, I will provide a brief overview of the financial performance for the quarter and the year gone by. I trust by that now you have had the opportunity to review our earnings presentation in press release. While our CMD has already discussed the macro outlook, I will elaborate on the financial performance, providing a more detailed analysis. First on the quarterly numbers, our operating income For Q4 FY26, stood at Rs. 7737 million, showcasing a growth of 86.6% YOY. Our Existed Operating Ipda for Q4 FY26 stood at Rs. 1018 million, showcasing a growth of 71.8% YOY. Adjusted EBITDA includes the impact of mark-to-market losses on certain tables against which corresponding hedging gains were recorded. As per accounting standards, MTM losses are recognized within expenses while related hedging gains are classified under other income. To better reflect the operating performance, hedging gains of Rs.52.4 million have been added back to EBITDA to the extent they offset the MDM losses on the same underlying payments. Our operating EBITDA for Q4F26 stood at Rs.966 million, showcasing a growth of 63% YOY. Profit after tax for Q4 FY26 to that Rs 706 million, showcasing a growth of 65.7% YOY with a margin of 9%. Now moving on to the annual numbers, operating income for the full year FY26 to that Rs 21836 million, showcasing a growth of 90% YOY. Adjusted operating EBITDA for FY26 stood at Rs. 2,901 million, showcasing a growth of 82.4% YOY. Operating EBITDA for the full year FY26 stood at Rs. 2,848 million, showcasing a growth of 79.1% YOY. Profit after tax for the full year F26 stood at Rs. 2058 million, showcasing a growth of 80.9% via white with a margin of 9.3%. Now, I would like to throw some light on key balance sheet ratios. Return on equity stood at a healthy 32.9% while return on capital employed for the same period was 37.5%. The growth fixed. Asset turnover ratio stood at 33.2 times as on 31st March 2026. Our cash conversion cycle as at March 2026 stood at 84 days. Receivable days improved from 114 days in December 2025 to 86 days in March 2026, reflecting stronger collections. Inventory days increased from 60 days in December 2025 to 86 days in March 2026, primarily on account of built-up of raw material stock, both 2D support, the execution of large strategic orders, and to secure adequate inventory of key inputs in light of surging global demand of AI compute infrastructure. Our balance sheet strength is reflected by us being a zero net debt company. The company had net-free cash of Rs. 833 million as on 31st March 2026. The net cash generated from operating activities was Rs. 1715 million for the initial year 2026. The board has recommended a dividend of 3 rupees per share suggest to shareholders approvals. Our strategic roadmap and growth priorities remain on track, supported by huge demand for high-end computing solutions, a healthy order book, and a solid pipeline. We are positioned to deliver consistent revenue and profitability in the upcoming fiscal year. Looking ahead, we remain confident of sustaining strong momentum and are guiding a revenue growth of 35-40% over the next couple of years. With this, I now hand over the call to Suma.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Renubed from IIFL Securities.

Please go ahead.

Yeah, hi. Good afternoon, team, and congratulations for the good performance. So, the first question is, while we had alluded to the fact that sequentially execution will be broadly flattish, can you also enforce in terms of, despite significantly higher share of organic growth coming in from the base business, gross margins technically have not improved, and the market margin sequentially will be broadly at 12.5%. So what has constrained the margin expansion despite significant jump up in base revenues this quarter?

So, Renu, just a couple of things, one that it is not that the strategic orders have been lagging behind, it's just that they have spilled over to the next quarter. Okay, so we are on track on that, and we entered the new financial with a very strong order book of about 2100 plus about 350 crores of the L1, so we entered with 2400, which is more than the last year's revenue. As far as the margin that are still, I think you need to see the margin adjusted of the correct loss and gain. So actually we've done better than the last quarter, and that is reflective of how the margin is proceeded to be, and it is within the guidelines.

Sure, because I was looking at the gross margin level, which sequentially does not show improvement there. I understand that's point number one. And point number two, so how are we looking at the pipeline of order flows, both for the base business, also on the strategic business, we haven't heard of any unique or large order wins for L1 in the last couple of quarters. So how is the order pipeline from the private service providers as well as from the direct government orders for the AI infrastructure here?

Biduji, actually, if you really see, what I said in my commentary very, very clearly, basically, the way the business is looking to me is really fabulous, actually, really speaking. I am showing an order book of around, basically, 2100 crores, but if I add the L1, it is 2400 crores, which is more than the order, more than my revenue currently is revenue. I think that itself is a very very solid thing if you really see. At the beginning of the year, we are entering a year with a very very too heavy and too robust order book already. Okay, so whatever has to be added will be added. And plus, so as basically organic business is growing, that means that our run rate and our other business is growing. The company is not dependent on the strategic orders as I have always been telling you, that primarily the company is running primarily on its own organic way and is growing in its organic way. The strategic orders we are announcing as and when it is coming. We have a lot of discussions. You are aware about the kind of AI demands which is happening not only in India but across the world. Okay, and basically it seems like it will go on for at least the next 18 to 24 months. So we have a huge basically pipeline wherein basically a lot of opportunities are there. And I think there will be no breadth of orders actually, really speaking.

Got it. So basically, extra strategic orders of almost 16, 16.5 billion, the base order book today is about 5 billion rupees, and including the L1 orders, it should add up close to 900 crores, or 9 billion, if I am right in terms of numbers. Does that draw the call in place?

Order book. So, I think the total order book, if you look today, is 2100 crores plus about 300 crores. So, 24 plus 100 crores is the order book including L1. And to that you add 4400 crores of pipeline. So, that will stack up to, let's say, about how much?

Six and a half thousand.

Six and a half thousand. Yeah. So, that's the total including pipeline and order book.

So, no, I was just referring to the base orders, excluding strategic. So, strategic orders in the backlog is about close to 16, 16.5 billion. And if I knock that off from the 64 billion order book, including L1, then today we have close to 800.

Yeah, you are right.

Got it. So, base business should be on track for 30-35% casual growth that we have been suggesting.

Yeah, basically, I think seeing the order book, you yourself will get that conviction.

Right. And on the operating margins, do we think the cost headwinds on the current environment we have been fully able to pass through? And EBITDA margins of 13, 13.5%, are they sustainable going forward for 27-28? And what would be your headline guidance for fiscal 27 on revenue EBITDA margins and KPIX?

So basically it will remain almost all the same.

So on the operating EBITDA margins, we are guiding 13 to 14 percent. If you understand that there is a high top line growth and we are still sustaining the EBITDA margins. So that primarily gives the validation and the resilience in the margins we are maintaining. So, in this way, if you see with this growth, the leverage is already embedded in the market. So, that's why we are guiding this 13 to 14 percent range for next couple of years. And on the revenue growth, we are driving 35 to 40 percent growth.

And CAPEX for fiscal 27, what are the plans there?

So with the current CAPEX, we are able to sustain the growth. There is no CAPEX expansion, no significant CAPEX is expected in this financial year 27. So there will be the routine CAPEX that will be coming across.

Okay. So, we can expect the 2025 growth of base spending will continue.

Yeah, more or less.

Got it. Sure. Thanks much. I'll get back in the queue with more questions. Thank you and all the rest.

Thank you.

Thank you. Next question is from the line of Seema Naim from ICSA Securities. Please go ahead.

Hi. Congrats on board of Yannick Growth. So how will the timeline for execution of the remaining strategic order will pan out? That's my first question. And second question is regarding data center growth which has slowed down. So can we share the reason behind it? Are we seeing increased competition growth? And what will be the target cash conversion cycle for FI 27? Yeah, these are my questions.

The next question

was the data center,

basically I think you need to see it, ma'am, actually Thank you very clearly. There are key pillars of growth, actually, which we have. So, basically, just don't go by the name. The first is the SEC that is super computing. That's already growing and that has always been around 30% of our business. Since this year, AI became 43% of our business. Still, it's 24% of our business. It's not growing. It's not stagnating. It's growing. But, basically, since AI is doing much faster, actually. Actually, the data center in our case is the private cloud and SCI. Please understand that. So these are the three pillars. First is FTC, second is private cloud, and third is AI. And private cloud is the data center business which used to be around 35% of the business. That is showing as 24% because again because of the AI, AI was 15% has become 43%. So that's the reason you're saying that number. But in reality it is growing at a good momentum. Definitely not growing as good as AI, but definitely it's growing at a good momentum. The data center, if you are saying that it goes deep road, the data center servers, if you are saying that's not a focus area for us, because we are not into box selling, it was only some marginal 5% of the business and it's around that, so we don't even track it. Our business, if you see, totality, more than 95% comes from these few segments, HTC, private cloud, and AI systems.

Thank you. The third question was the cash conversion cycle. So, our cash conversion cycle typically operates from 90 to 110 days. Now, this is something which cannot be projected for next year at least, but we would like to say that the range will remain like that. There will be some increase in the inventory day projected for this year also, but we will stay within the range of 90 to 110, that's what we see.

Got it. Thank you, Anurumi.

Thank you. Next question is from the line of Harindra Singh from Blackstone. Please go ahead.

Yeah, hi. So, my question is basically on the India AI demand. So, India is somewhere around 1.5 gigawatt current, and by 2030, the country's plan is to go up to 9 gigawatt. So, first question is, the way the industry, as a country, we are going to grow from 1.5 gigawatts to 9 gigawatts, do you see your industrial growth in line with the current country expectation? And second question is, a lot of hyperscalers. Like Amazon, Microsoft, they are going very aggressive in the country, and they are building up more than one gigawatt capacity in Hyderabad, Mumbai. So, like, I saw Yota as your one of the customers. Are you focused on hyperscalers, or, like, do you have any growth plans going into directly hyperscalers rather than the co-location providers? Thank you.

So, basically, first thing is that India AI mission, you know, is based on many pillars, actually, there are five or seven pillars out there, actually, really speaking, and government, you know, that Prime Minister's focus is very, very clearly on the, basically, India has to become a leading country for providing AI solutions, actually. So, the government has been very clearly focusing upon it, has been working very hard and has been trying to bring AI on the forefront for the country so that India makes an impact to the world on the AI space actually. And so that is going on very well in track. Government's current spending budget, they are even ready to expand that also if they are able to do it. So, really, the budget is not the main criteria there. The criteria is how fast they are able to spend the money and how fast they are able to get in the new infrastructure. So, there are two parts of it, as we have been telling you, telling me at the time, that one is basically, government is trying to basically send out GPUs from various new cloud providers like Yota and others, and basically another is that government is trying to set up their own infrastructure. So, setting up their own info is taking time, but definitely that process has also started. But in the meantime, basically, they are trying to take, in the RFP model, they are trying to take GQs from various kinds of NeoCloud providers. So, that is going on on track, and that is happening very clearly, and the government's home demand is also there. So, as regards your, particularly on the side of what is the kind of spend that is happening, The government is basically a large amount. They were talking about 10,000 GQs which became 25,000 GQs. Now they are even ready to go up to 100,000 GQs also. So government focus is very clear. Very clearly they want to create AI infrastructure in the country. So all the AI startups and all the people who want to work on AI, they don't build a pinch of it and the GQs are made available to them so that they can really do their work. If you've got a chance, you might have even seen the success of the India AI Summit, the kind of traction it got, the kind of people who are attending it, it was only targeted at 100,000 people, but more than 700,000 people really attended it. So basically the client himself was there for three days, so you can very well understand the kind of focus and attention they are trying to give it. As regards your question, basically primarily that are we targeting hyperscalers? At this point of time, my answer is that at this point of time, we are not targeting really hyperscalers, because India is a market in which basically still is not a hyperscaler-driven market. It's primarily more of a sovereign and those kind of market actually is currently in place. But definitely hyperscalers come, and if they are interested, we can definitely bid for them, we can definitely work with them. But at this point of time, we are not targeting hyperscalers, and I don't think India is a hyperscaler market. They are trying to set up large data centers. They are in greenfield projects. They will take time to basically come up.

This is what I can add. Yes, I think you have already covered all the details. And as you know, demand is concerned, I can definitely tell you the way. The investments are going up, especially from the government side, and now the enterprise investment has also started coming in. So it clearly gives a way for us, and we find a lot of set room for us to grow, and as you rightly mentioned, the capacity in which India holds in terms of weather centre, there is any way going to grow up. So that clearly shows that there is no dirt, demand is concerned. So we definitely want to engage the opportunity, And this is what we are doing. So you can find a lot of good quarters coming our way.

Yep. Thanks. So, these are the two questions. So, the way the industry and the AI industry is changing, so a lot of companies like TCS, they have come up with a company style like HyperVolge where they are serving these hyperscalers, providing them colo services where they are making huge 50-55% of margin. In future, if you see growth into these business, and happy to see you in other areas also which are more profitable, and you can add value because you are contributing to major part of the items which goes into the data center.

All these initiatives really add to our business actually. All these basically, you see all these default global service providers actually or basically ASI like CCS, Infosys and basically Wipro and all these. So basically they are all evolving and they are all developing different kinds of products so as to service AI workloads. So all these basically offer us more opportunities, and all these are our customers, all our probable customers, we are under NDA, so we cannot disclose which customer, what they are trying to do. But all these definitely act, because they need AI infrastructure, they need the AI stack and everything, it needs to be done. On that, they offer the services to the customer. So more and more AI workload is coming to them, and so that AI workload delivery is there, so definitely that's a good business opportunity for us.

Thank you.

Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict yourself to two questions for participants. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Akshay from AK Investments. Please go ahead.

Hi, sir. Thank you. Congratulations for the great set of numbers. Actually, your voice is low. Hi, sir. Am I audible? Okay. So, my first question is regarding the promoter schedule in the quarter four. So, the promoter have nearly sold the four-person schedule. So, what was the reason for the plan, and do we expect any further dilution in the promoter holding going forward?

Yeah, so I think first, answer the second question first, we are not going to dilute, this stake sale was done in the month of February, we are not going to dilute 12 months from there, so that's already confirmed, and stake sale, of course it was done because there was some, there was a liquidity, there was limited liquidity, so by this stake sale, we have been able to increase the liquidity of the stock.

Okay. Okay, sir.

And, sir, my second question is regarding the presentation. So, there is one line in the presentation that we have commissioned the new set of the art production facility spanning across 15,000 square foot. So, is this the new manufacturing facility that we have commissioned over eight years? Then, how much capacity or how much incremental capacity does it bring?

Yes, this is a state-of-the-art manufacturing facility which we have set up, and largely the target was to start manufacturing the range of those systems which we had not been manufacturing earlier. And now as you can see that we have infused the new architecture of our latest emission systems as well. So keeping that in mind, this facility has been set up and you will be happy to know that with this facility, we will also be designing the complete range of liquor-cooled systems as well. And now the idea was to increase the density per rat In our case, and that is what we have, you know, this facility has helped us, and now we will be able to scale even beyond, you know, 150 kilowatt per that kind of an architecture. So this facility was very important for us, so that was in there, you know, in the process earlier. So now we have completed it, and we will be targeting the larger development with the help of this facility.

Okay, sir. So currently, what is the total revenue capabilities that we have from all our capacities?

So basically actually you will have to understand the company very well. This is a technology company, this is not a capacity driven company actually. We are a capability driven company. We have never said, we never work on capacity. Our capacity utilization will be around 60% to 70% only. Family, we are not driven by just a volume sale or something of that nature. You have to understand the basics of the company, actually. The company doesn't work on capacity. We work on capability. If tomorrow, India's new Vera Rubin is coming up, we are already set up for the partnership for that. Tomorrow, if we have to manufacture Vera Rubin based servers and their racks and all that, we definitely need to set up something, we'll definitely set up. But again, that will not be capacity-based, that will be capability-based.

Okay, sir. Okay. All right, sir, and thank you so much, sir.

Thank you.

Thank you. Next question is from the line of Chihuo from Fitted Asset Management. Please go ahead.

Hello. Can you hear me? Yes. Hey, Sanjay. Congratulations on a good year. I have two questions. Number one, globally, we've seen this Atlantic AI phenomenon using today, driving up the TV back there.

Your voice seems very low. We are unable to hear you. Can it be a bit closer to the mic?

Okay, can you hear me?

Yes.

Can you hear me? Yes, yes. Okay, so my first question is the agentic AI impact on the CPU. Here today, we see a lot of demand after the open floor launch. So, I think a lot of CPU usage. So, we saw the Intel, we saw a very, very strong earnings and outlook. So for NetWeb, I think the relationship is on the high-performing computing segment where you sell the CPU server. Last year, apparently, the AI system is very good, but then the HPC segment is more steady. My question is, because of this agentic AI trend, do you see a much faster acceleration in the HPC segment revenue this year and maybe next year? That's my first question.

So basically, thanks for your question, the agentic AI is definitely again one of the factors which is driving the AI actually, and as regards your relation between basically agentic AI driving HCC says, I don't think that is going to impact, I don't think in this current year, at least in this geopolitical region, what I personally see. HPC itself is growing very well. Basically, you are seeing HPC basically growth around 31%. It is not less actually. But you are seeing the numbers grow because the AI has grown too much. So that is showing it that way. But let me tell you, HPC because NSF, National Supercomputing Mission 2.0 is already there. Plus, basically, adoption of HPC and AI together is also happening across verticals. You see the automobile industry is using it. Basically, there is a lot of use in oil and gas in different areas. So, I personally feel the HPC will keep on growing. But definitely, AI will grow at a larger pace. But as regards to your question on Intel's current development, I think that will take some more time to create an impact to the HPC market growth in India as such what I can suggest there.

Okay, understood. Thank you. My second question is regarding the healthiness of the India AI investment by the government. Because I saw some articles saying that the investment in the downstream data center, the pickup rate is quite low. So that some of these data centers, they have to rent it out to the other customers outside of the India AI mission. Can you, from your perspective, comment about how healthy is the downstream absorption of the Indian AI mission investment by the government? Thank you.

I see to answer your question. So as we have explained earlier also, so Government of India is very clear at the moment that, you know,

they want India to become the AI service

industry for the world, and for that purpose, you know, this process of India mission has been going on for last, you know, almost half a decade, and the process started long back, and this mission is very clear that the investments are going on two fronts. One, that they want to basically build facilities through the CSPs, and the second is that they want to build the facilities on on-prem basis. So, investments, outlays, whatever has been outlined by Government of India so far, has been as part of their first, you know, tranche of investments, and that itself clearly signifies the efforts by the Government of India, and that is going to, you know, there is anyway seeing an impact all over country, because enterprises and CSPs all are putting, you know, putting across their efforts to build up the facility, and now going forward, the expectation is that the investments are only going to go up from here, by government also, and by the enterprises. So, the opportunity gives us a lot of headroom to prove, and we are also welcoming the opportunity with open hands, and the kind of work we are doing, and as you can see, the new military facility which we have set up, that is also keeping in mind that we wanted to add a new capability of designing Dell CPU systems which can serve such kind of requirements coming from both the fronts, be it the DSP front or the on-print requirement front of Government So, we are, you know, absolutely capable, absolutely ready to address the requirements, so I think this is quite a good opportunity for us.

The data center investment also is increasing from the software side also. People are really interested because they have demand on hand. And so they are also trying to, when government is a ready buyer, so people are trying to take some time to put up the data center investment as you understand that. But people are already working, there is a lot of interest around that. If you see the government taxation also which they announced, so they are promoting data centers. So more and more data center investments are coming in. So, we are pretty sure the kind of basically the demand gear thing and kind of interest to the government is seeing. So, things will roll on very well.

Okay. Thank you.

Thank you very much.

Thank you. Next question is from the line of Sandeep Shah from Equator Securities. Please proceed.

Yeah, thanks. Thanks for the opportunity and contact for a good execution despite the supply chain management issue and its impact on the raw materials. Sir, the first question is, this book, guidance of 35, 40 yen, with a margin of 13, 14, both of which is for the base business, excluding strategic deal, how to consider this guidance?

So, the revenue growth of 35 million is very up to the EBITDA margin.

So, overall, this is the enterprise level, I guess.

But strategic order, you are saying in the first three quarters, it would be executed. So, that itself is a big growth driver for the coming year. Correct. So, the growth has to be higher than 35-40, right?

So, we are

writing you the best case to worry at all, something.

Okay, okay.

So, my question is, because we are entering the area with 2400 crore already as an order book, okay, including the L1, that itself is a robust signal that basically we are entering the area with the order book which is more than the last year's crore was, that is, there more business addition will happen, but you understand that we are not box-pushers, we are primarily more into proactive sellers rather than reactive sellers, so basically we just don't want to become a god of The company has been to engage into more and more value-added kind of things. If you see my customers also are 50% is government, 50% is enterprise, and enterprise customers are also large customers primarily. So basically those kind of business really takes time to completely loop in and get in. So I feel the kind of revenue guidance which we are giving, we will like to maintain it at 35% to 40%.

Okay, okay. And sir, in terms of the current inventory level, it is fair to assume that the current order book to some extent can be compensated with the current inventory, which in turn to some extent will help you to maintain margin because the inventory could be built at a price lower than the current spot rate price.

I think we will not like to guide on the inventory and the margin actually. Overall, I like to guide you. The margins will remain at the same 13 to 15 percent. We have been, always been, you see that last year also we performed as for our guidance and we are very sure that we will do it this year also.

Oh, okay. And just last question in terms of export sales and e-development progress you want to share, work for days, long revenue, and high stuff.

Sorry to interrupt, Mr. Shah, your voice is breaking.

I will take this call. I understood Sandeep Ji's question. So, Sandeep Ji, basically, you know that AI demand is unweighted. It's very difficult to fulfill the domestic demand itself. So, really, frankly speaking, we are focused on exports. We are not getting time to do it. And currently, the worldwide AI demand is embedded. So basically, let me first suffice the domestic demand, then we look into a score. So it will remain around the 5% which we have been currently doing. It will remain around that only.

Okay, and sir, last question, apart from Google, even AWS and other hyperscaler are introducing their own chip. So, in this scenario, are we geared up in terms of tie-up beyond the top three chip providers or manufacturer? Because if this scale increases through hyperscaler-produced chip design, can you share the progress, how we are tying up and making sure that the motherboard design also meets a variety of chip designs?

So, Suniji, this has been, you know, these efforts have been going on at their end for quite some time, because, you know, emergence of TQ is not something which has happened just now. So, we are aware of the progress which is happening on the other side of the market as well. And we are open to go in that direction also, as long as the significant development is being shown. And as you know, that we have got our in-house design teams also. That is the reason we were able to, you know, take up the disc-based architecture so far. So, same way, we will be able to look at the other ownership makers also. As long as there is a significant technological advancement at their end, it has got an acceptance in the market. So, as a design team, as an OEM, we don't have any reservations of it. All of this. Thanks for all of this. Thank you.

Thank you. Next question is from the line of Vinay Menon from Monarch Network Capital. Please go ahead.

Hi, sir. Hi. Thank you for the opportunity and congratulations on great execution this quarter, sir. A couple of questions on my side. On the component pricing, are you seeing any kind of softness or are we still looking at component prices being at each level for maybe the next few quarters?

So basically, really speaking, I am not supposed to guide on the component pricing on my call, actually. But let me tell you, the AI demand is really unbated. So that is definitely putting pressure on the components, actually, really speaking. So if it will remain unbated, definitely there will be pressure on the component pricing when component supply changes. But basically, as I have been always been saying that we are proactive sellers, we have good projections of what is going to come, what is not going to come. So we plan our inventories and our contracts, our relationship with OEMs really basically are aligned that way. So it doesn't impact us much in case there is a price increase. So basically, we can always pass on to our new customers.

Okay, thank you. And a couple of more things. One is, you know, we've seen demand move from, you know, training to inference, you know, last few quarters. So, that is obviously less GPU dependent and more as, you know, like, some defense and maybe TPUs are also coming in. So, how are we going to get impacted in terms of the demand shifting? Are we going to see more demand with inference demand improving or how does the economics work for us?

So, first of all, you know, as regards, you know, our readiness is concerned, we have always been ready to address the demand coming from the training and the inference side, both sides of the market, and that's the reason, you know, that was reflected in our new introduction of our products as well, because we have kept on adding those products also, which can take care of inference exclusively, or even the products which can take care of training and inference both. So, from the resilience perspective, we have been, you know, seeing the market developments and accordingly only we have designed our products, which is on that. And secondly, as we got, you know, whether the requirement will go up from here or it will go down, so I can definitely tell you that the demand is only going to go up from here. Reason being, on one hand, the training kind of work has already been going on in the country and outside already, and at the same time, whatever development has been done on the training side earlier, Now the time is that inference will also generate the additional demand. So I think it is good for us that inference is also taking up and this is only going to add to the overall demand. So I think it is a good situation for us to handle and we are pretty much ready with both the type of products and both the type of solutions which can take care of the requirements.

Okay, and one more thing on the guidance of 35-40% that is enclosure of the air emission deal which we will include over the next 2-3 quarters.

Good morning, everyone. Thank you.

So, the guidance on the top line is not inclusive of the strategic order, it is the organic order which is about 25%.

Okay. Okay. That is helpful. That's all from my side. Thank you so much and all the rest.

Thank you.

Thank you. Next question is from the line of Pooja Seth. So, yes, security is so fit.

First of all, thank you and congrats for having a good type of number.

So, just want a clarification.

In your strategic order book, whatever is when you guys shared it, it comes under your AI segment. Yes, so as we were writing as a 35 to 40% growth, so could you throw some likes on the segment twice in which segment you are seeing, except for AI, because as you see our phone, which is related to HPC and XPS, we are writing about 26% of growth this year. So how are we seeing this?

I think we do give guidance on an overall basis. There is too much of detail to be given for guidance. We would like to speak to the guidance on an overall basis. Thank you.

But is there some sort of guidance like in which segment you are seeing?

So basically, all the three segments, if you understand three segments today, please understand our core business, okay? You understand our business, our business is HTC, our business is private cloud and AI. Now you tell me this segment will not grow, ma'am. I give you a reverse question. This is a segment which will grow very heavily. Private cloud data center is going unbated, but AI is worldwide grown. So all the three segments, 95% of business is coming, the companies need to see businesses. Then all the three segments are really growing at a very good pace. So definitely that will grow. So definitely, the AI should blow at a master phase, but I personally see in future, like I was guiding that AI should be around 25 to 30 percent. I can tell you that AI will remain around 35 percent of my business. Balance will be shared equally between the HPC and private cloud.

Okay. And so, one more question. As for this quarter, we have seen there was a net, water has increased about 270 crores. So, could you give a breakdown of why this happened?

To fund the strategic orders, these are very short-term borrowings, these are no long-term borrowings, and these are primarily to execute the working capital required for any large strategic orders or at the same time any regular orders that are going through, and this gets settled in a very short span of time.

So, I mean, you can take it that this borrowings is transitionary.

Okay. Oops, thank you.

Thank you. Next question is from the line of Munsee Munsee in SETI from SETI Capital. Please go ahead.

Hello, sir. I'm out.

Yes, please go ahead.

Sir, I wanted to know regarding our cash conversion cycle. Like, I know it's already being on the question, but the thing is, The cash conversion cycle is more than 100 days. So, don't you think with increasing ROE and ROC, you know, it will be difficult for us. Like, it will be, you know, that we need to reduce the cash conversion cycle drastically for that.

Drastically, no, no. I don't think it is 100 days. I think we have shared the presentation, if you would have had a look at the presentation. It is 84 days. And primarily because of inventory which we have created in inventory for our large orders which we are carrying in hand as of this.

A typical add to that. So, yeah, correctly mentioned by Sunvi, sir, so it's not 100, it's around 84, and still the increase is because of the inventory days. If you see the receivable days from the last quarter, it has significantly improved, and inventory days have gone up on the accounts output stocking the critical components for potential and large orders.

And plus, basically, we have always guided that our bank of business will ruin between 80 to 90. So, I think this is not a surprise.

Okay. Actually, it was guided here only in the console, like, more than 100, 120. That's why I was asking.

90 to 110 is a standard guidance. So, yeah, particularly. I think we should go okay.

Okay, okay. And my last technical question is regarding our exports. So, in the last phone call, you were saying that you were tracking different exports also. So, I wanted to know regarding that, any pipeline regarding our exports per se?

So, as you could, you know, I hope you heard our answer earlier also that, you know, see the kind of market we see in the domestic space. So, we are right now, you know, trying to fulfill the demand coming from the domestic market itself because there is a lot of headroom for us to go addressing, you know, the overall, you know, incremental growth in the market and all that. So, first, once we are, you know, able to address the complete market here in India, definitely we will be going out as well. But, you know, the priority right now is domestic. And, you know, since domestic is anyway giving us the required quantum of growth, so there is no harm focusing on this. But yes, you know, going outside India is definitely, you know, in our pipeline. And we will be focusing on that as well.

Okay, so my last question, like you have a 4000 dollar pipeline, right? Can you tell me what percentage of that can be converted on the fee-per-side in this financial year? 60%.

No, no, no, no, no. Generally, the conversion is about 50%, but this will fuel about 1.5 to 2 years of, you know, 18 to 24 months. So it's not that all of the 50% will happen this year. Okay, okay, thank you.

Okay, from the fourth question, please request you to rejoin the queue, sir, for the follow-up question. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict yourself to one question only. Next question is from the line of Vatsal Aghanwal from Whois and Retail Investor. Please go ahead.

So M is audible.

Yes, sir.

Given the strong cash position on the balance sheet, can you explain the reason behind the increase in the short-term borrowings? Because it appears counterintuitive, sir.

So, it's not bad. The borrowings have some covenants. When we borrow the funds, we have to maintain the borrowing period for some period of time. And these are the numbered basis of reporting days. So, there are RBI guidelines where the WCDFs are supposed to be maintained for certain period of time. So, to avoid that, that's why it's coming here. And we do have cash, but we cannot settle the borrowings with them. So, they are the commitments which are given to lender and the coordination with the RGIS customers.

And secondly, sir, I was just trying to understand the business segment. Can you please explain the difference between the private cloud business segment and the AI systems business segment?

See, we have talked about it in the earlier quarters also, so the difference is just that private cloud is basically catering to a different... So, from the client side of the market, where in you know, the convergence of compute, network, and memory happens, whereas the AI side of the market is largely taking care of the AI workload. If you are trying to know about what is the difference in the workload side, from these two markets, then the answer is this. And if you want to know about what is the difference from the business side of it, that who all are the private customers from the private cloud and who all are the private customers from the AI system side, then I can be able to explain. I hope I have answered you that the private cloud is largely for the convergence of compute network and the hyper-conversion put together in a single platform. That is for the private cloud and SEI, whereas the AI system is largely meant for the purpose of AI workloads.

No, sir, because my question is that for data center, it should be in the AM systems business rather than the private cloud, if my understanding is correct.

So data center assets, you know, see, one thing is that data center is assets which cuts across all the verticals for us, product

verticals, but largely, data center is largely, you know, focused around, you know, the private cloud and SPI for us.

Reason being that the data center workloads what we talk about are the workloads where is the convergence of compute with the storage and the network put together happens. So that is basically dealt with, dealt in case of private cloud and SDI. That's the reason we don't count it as part of AI system, but we count it as part of private cloud. And that's how these two are related. Thanks a lot. Thank you.

Thank you. Next question is from the line of Rajay from REL2IR. Please go ahead.

Hello, I'm already in.

Yes, please go ahead.

Yeah, so my first question is that as to what earlier party has said that out of your total pipeline, 50% would be converted, and out of that, some of the orders would be passed on to 1-2 years. So, did I hear that correctly?

I think basically what we

mentioned is that somebody asked us that pipeline, how much time will pipeline be converted. So pipeline is a very very dynamic situation which keeps on changing every day. So whatever of the reported rates, whatever pipeline is, that pipeline normally gets, 60% of it gets converted, but it takes around one and a half years, around 18 months to get converted. All of it, total of it.

Okay.

Just to explain to you, the conversion happens like every day, right? That's what I'm saying that the pipeline which is sticking today may convert, the 100% of it may be converted by one and a half year, but it will happen in France. And new pipeline will also keep entering into this. This is a very dynamic thing, right? Pipeline, someone will convert into order, someone will go out of it, new pipeline will be entered. So this is a very dynamic situation.

Okay, and here, our order book, the amount is 2,400, including the N1.

So, I believe, as per what I'm able to understand, it gets executed in 3 to 6 months, right? So, the revenue visibility that, like, for this order book is 3 to 6 months only, or am I missing something out in this?

Good morning. Basically, normally our shipping cycle is very different. Normally our auto cycle is somewhere around 10 to 20 weeks we normally check out. Okay, it used to be 10 to 16 weeks, but it can be 10 to 20 weeks, it can normally go up, but as because strategic orders are concerned, we are not guiding on the execution, but basically what I said is that the strategic order should go in next three quarters actually, and phase one, and as regards the organic order book is concerned, we seem that within 18 to 20 weeks, it should get built up.

Okay, I'm sorry, can you biophobic the strategic order and be your ideal order to me? I'm sorry, I mean, your apartment is not...

It's a presentation. I'm... 1600 crores is the strategic order, 472 crores is the organic order, and 327 crores is my L1. Which is again organic? It is again organic.

Okay. Okay, okay, sir. Okay, thank you.

Thank you.

Thank you. Ladies and gentlemen, we will take this as a last question for today. I now hand the conference over to the management for the closing comments.

Thank you. Thank you for taking your time and joining us. Thank you so much. I appreciate your interest. Thank you.

Thank you, sir. On behalf of ICA Securities, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.