Netweb Technol. Q1 FY27 Results (NSE: NETWEB)
Signal: Margin expansion
The read
Revenue growth accelerated to +174% YoY, with EBITDA margin expanding 527bps on operating leverage despite gross margin compression from higher raw material costs; PAT grew 153% YoY but the quality is high as it tracks operating profit, not one-offs. Key question is whether gross margin recovers as the business scales.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹114.14 Cr | 174.4% | 20.4% |
| EBIT | ₹25.47 Cr | 124.6% | |
| Net profit | ₹8.47 Cr | 152.7% | |
| EPS | ₹14.98 | 178.4% | |
| EBIT margin | 22.32% |
P&L walk
Revenue surged +174% YoY to ₹1,141.38 Mn; cost of materials grew faster at +205% YoY, compressing gross margin by ~530bps, but operating leverage from employee costs (+34%) and fixed costs propelled EBITDA margin up +527bps YoY to 22.32%; PAT grew +153% YoY tracking operating profit, with EPS growth outpacing PAT due to no dilution.
Key positives
- Revenue grew 174% YoY to ₹1,141.38 Mn, accelerating from prior quarter's sequential growth of 20%.
- EBITDA margin expanded +527bps YoY to 22.32% on operating leverage as employee costs grew only 34% versus revenue +174%.
- PAT grew 153% YoY with EPS up 178% to ₹14.98, tracking operating improvement.
- Credit rating reaffirmed at enhanced amount by CRISIL (recent event).
Key concerns
- Gross margin compressed ~629bps YoY as cost of materials consumed grew +205% YoY, outpacing revenue; raw material % of revenue rose from 55.4% to 62.6%.
- Finance costs rose 53% YoY, though still manageable at 1.3% of revenue.
- Company operates a single segment (computers) with no diversification buffer.
Research and educational content only. Not investment advice.