Rashi Peripherals Ltd: Stellar quarter - Company Update

We retain "BUY" rating and raise our target price to Rs. 610 (vs Rs 505 earlier). Rashi reported topline growth of 42.6% YoY in a seasonally weak quarter, on the back of strong sales volume & prices across PES segment (56% of revenue) and LIT (44% of revenue). Our dealer checks suggested strong demand across PCs, components and price hikes of 10-20% also seen across both segments. The company provisioned Rs 40+ mn for labour code changes and Rs 70 mn of ESOP expenses, despite which it achieved 3%+ EBITDA margins (Industry leading). Cashflow continues to remain positive on the back of better working capital management; management is confident of delivering positive OCF for FY26e.

Strong revenue growth across segments:

The company reported revenue growth of (3%) QoQ / 42.6% YoY, primarily due to strong demand for PCs in the enterprise segment. PES saw pricing growth of 15-20%, while LIT saw a 20-25%+ pricing growth. Within the PES segment, AI-PCs have started to gain traction especially on the enterprise side. The co. is looking to participate in large deals from FY27e, which bodes well for growth but could hamper margins. The deal with Dell continued to show growth with full potential to be seen in FY27e. 80%+ revenue contribution now comes from top 9 OEMs vs 7 in FY25, which mitigates OEM risk.

EBITDA margins to remain at the upper end of 2.7-3%

EBITDA margins came in at a 3% despite one-time labour code provisions and ESOP expenses (ex of that it would be 3.2%). We expect the margins to remain at the upper end of 2.7-3% over the next few quarters. The company did not clock any large deals in Q3 which helped margins. Additionally, the company increased its brand portfolio from 79 to 82 in Q3, adding global and Indian brands.

Outlook; OCF to turn positive

The strategic change from chasing larger enterprise deals (Yotta deal) to going after small and more frequent deals is reflected in better margins and predictable growth. The rise in component prices (DRAMs and SSDs) has helped the company push inventory to its channel partners in Q3, a trend we feel should continue up till Q1. With PC sales clocking double digit growth in Q3, we expect strong enterprise demand in Q4 to drive PC sales. We expect CFO to remain positive for FY26E, with ROCE to be in the range of 13-14%+.

Valuation

We are factoring in 12.8%/21.6%/18.3% CAGR in Revenue/EBITDA/PAT over FY25-28E. We value the company at 12x Dec’28E EPS, arriving at a target price of Rs 610 (Rs 505 earlier) on the back of strong growth trajectory across segments.

Key risks:

1. Delay in replacement cycle for PC’s,
2. Sudden decline in DRAM/SSD prices
3. Failure to win large deals from data center projects.

Company website: https://rptechindia.com/

*CMP is as per report published date

Click to download the full Rashi Peripherals Ltd Q3FY26 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 Q3FY26 Company Update

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

1. What is the investment view on Rashi Peripherals?

The stock is rated BUY with a target price of ₹610, implying ~57% upside from current levels.

2. What drove the strong quarterly performance?

Revenue grew 42.6% YoY driven by strong enterprise PC demand, higher component prices and robust growth across PES and LIT segments.

3. What are the key growth drivers ahead?

Enterprise demand recovery, AI-PC adoption, participation in large deals from FY27, expanding OEM partnerships and improved working capital management.

4. How are margins and cash flows expected to trend?

EBITDA margins are expected to sustain at the upper end of the 2.7–3% range, with positive operating cash flows and improving ROCE of 13–14%.

5. What are the key risks to the outlook?

Delay in PC replacement cycles, sharp correction in DRAM/SSD prices, or slower-than-expected wins in large enterprise and data center deals.

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