Rashi Peripherals Ltd - Stellar all-round performance | Company Update

Rashi’s Q4FY26 earnings were ahead of our estimates, driven by strong ASP growth in peripherals along with improving traction for AI PCs.  PES (58% of revenue) benefited from multiple tailwinds, including Windows 10 expiry-led replacement demand and a sharp rise in PC prices seen in Q4. Volume growth across segments were at high single digit, while higher ASPs contribution increased to overall revenue. EBITDA margins were in-line with our estimates of 3%, with the company continuing to operate at the upper end of its guided margin band of 2.5-3%. The company generated CFO of Rs 1.1bn (vs Rs -2.9bn in FY25), on the back of better working capital management. We broadly maintain our earnings estimates for FY27/28E and we retain our target multiple of 12x. We reiterate our BUY rating with a revised TP of Rs 630 (Rs 610 earlier).

Strong revenue growth across segments:

The company reported revenue growth of 11.4%/42.6% QoQ/YoY, primarily due to strong demand for PCs in the enterprise segment.  PES continued to witness high single-digit pricing growth, while LIT reported mid-teen price growth. Within the PES segment, shipments of AI-enabled PCs grew 129% YoY, accounting for 25% of total PC sales in India. On large deals, the company remains cautious citing sufficient demand in the enterprise segment to support overall growth, while higher prices are expected to impact consumer sentiment in H2FY27E. The Dell partnership continued to gain traction, with its contribution to revenue expected to reach double digits in FY27E. The semiconductor distribution segment is expected to witness strong growth in FY27E, albeit on approximately 1.5bn.

EBITDA margins to remain at the upper end of 2.5-3%:

EBITDA margins for Q4FY26 came in-line with our estimate of 3%. We expect margins to remain at the upper end of 2.5-3% over FY27/28E on the back of operational efficiency.  The company did not clock any low margin large deals in Q4, supporting margins. The company generated CFO of Rs1.1bn, which marks a tremendous turnaround from FY25 (CFO of Rs -2.9bn). This improvement was driven by better working capital efficiency, which we expect to further strengthen over FY27/28E. Gross debt/EBITDA also improved to 2.1x from 2.7x in FY25, reflecting a more comfortable leverage position despite the increase in gross debt in FY27E.

Outlook:

The strategic shift from pursuing large enterprise deals (Yotta deal of Rs 15bn) to focusing on smaller and recurring deals is translating into better margins and more predictable growth. Anticipated rise in component prices, particularly DRAM and SSDs, enabled the company to push inventory through its channel partners in Q4, a trend we expect to sustain through Q1FY27E. We model low single-digit volume growth for FY27E, with higher ASPs driving revenue growth in H1FY27E. Any sharp correction in component prices could result in a couple of quarters of ASP decline; however, we expect volume growth to recover with a lag and partially offset the pricing impact. We expect CFO to remain positive for FY27/F28E, with ROCE to be in the range of 15-16%+.

Valuation, View and Risk:

We have broadly maintained our FY27/28E earnings estimates, despite Q4FY26 performance coming in ahead of expectations, as most of the outperformance has already been factored into our FY27–28E forecast. We have also kept our target multiple unchanged at 12x- in-line with peers. We expect Rashi to deliver Revenue/EBITDA/PAT CAGR of 13.1%/21.5%/18.2% over FY25-FY28E, supported by strong momentum across both segments.   Rolling over our estimates to FY28E, we arrive at a TP of Rs 630 (vs Rs 610 earlier). Key risks: include delay in replacement cycle for PC’s, sharp decline in DRAM/SSD prices, higher working capital intensity.

Company website: https://rptechindia.com/

*CMP is as per report published date

Click to download the full Rashi Peripherals Ltd Q4FY26 Company Update

Analyst:

• Vinay Menon - Senior Research Analyst, Institutional Equities (NISM-201600112117)
• Miloni Mehta - Research Associate, Institutional Equities (NISM-201800127664)

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FAQs on Rashi Peripherals Ltd Q4FY26 Company Update

Below are key investor FAQs highlighting the growth drivers, financial outlook and risks based on our institutional equity research view.

1. What drove Rashi Peripherals’ Q4FY26 growth?

Strong enterprise PC demand, higher average selling prices, AI-enabled PC adoption and favorable pricing trends supported revenue growth.

2. How significant is AI PC demand for the company?

AI-enabled PC shipments grew 129% YoY and contributed nearly 25% of total PC sales in India during the quarter.

3. What supported the improvement in cash flows?

Better working capital management and operational efficiency helped the company generate positive operating cash flow in FY26.

4. What is the outlook for FY27 and FY28?

The company expects continued growth driven by enterprise demand, semiconductor distribution expansion and recurring technology deals.

5. What are the key risks for Rashi Peripherals?

Major risks include delays in the PC replacement cycle, sharp component price declines and higher working capital intensity.

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