We retain "BUY" rating with a Target Price of Rs. 505 (vs Rs 525 earlier). Rashi Peripherals ltd reported decent topline growth, on the back of strong sales from the PES segment (PCs, Desktops). Our dealer checks suggest demand is improving for AI-enabled PCs as prices are more attractive on a YoY basis. Ecommerce contributed 17% of sales in Q2 (seasonally strong quarter), which added pressure on margins along with ESOP expenses. Cashflow turned positive on the back of better working capital management; management is confident of turning OCF positive for FY26e and beyond. We believe the pick-up in the replacement cycle for PC’s in H2FY26 coupled with improved demand for data center products will be a positive catalyst for Rashi over the next 2-years.
The company reported revenue growth of 31.8% QoQ / 12.1% YoY, primarily due to strong demand for PCs in the consumer segment. Industry grew at 5-6%, while Rashi continued to grow 2x of industry growth. ICT sector is expected to grow 8-10% in H2, which bodes well for Rashi. 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 H2FY26, which bodes well for growth. The deal with Dell could potentially add Rs10bn of revenue annually.
EBITDA margins came in at a 2.5% on account of higher contribution of online sales and ESOP expenses. Lower employee costs and other expenses helped the co. to sustain margins above 2.5%. We expect the margins to normalize to 2.7-3% over the next few quarters as the company focuses on growth. The company did not clock any large deals in Q2 which helped margins. Additionally, the company increased its brand portfolio from 74 to 79 in Q1, adding global and Indian brands.
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 anticipated PC replacement cycle from H2FY26—driven by increased adoption of AI-enabled PCs—should aid growth. Cash generation improved in H1 on the back of better collection and working capital management backed by improved credit rating. We expect CFO to remain positive for FY26E, with ROCE to be in the range of 13-15%+. The exit of the Company Secretary and compliance officer is unlikely to impact business operations, as suitable replacements has already been appointed.
We are factoring in 12.2%/21.5%/14.9% CAGR in Revenue/EBITDA/PAT over FY25-28E. We value the company at 12x Sept’28E EPS, arriving at a TP of Rs505 (Rs 525 earlier) on the back of higher PES segment growth (lower margins vs LIT). Key risks: 1) Delay in replacement cycle for PC’s, 2) Supply related issues for components (CPUs, GPUs, RAM) 3) Failure to win large deals from data center projects.
Company website: https://rptechindia.com/
| Rating | BUY |
|---|---|
| CMP | INR 325 |
| Target Price | INR 505 |
| Upside | 55% |
Click to download the full Rashi Peripherals Limited Company Update
The company reported 31.8% QoQ and 12.1% YoY revenue growth, driven by strong demand in the PES segment, particularly PCs and desktops, outpacing overall industry growth of 5–6%.
Rashi turned cashflow positive due to better working capital management and improved collections. Management expects operating cash flow to remain positive in FY26 and beyond.
EBITDA margin stood at 2.5% in Q2, impacted by higher ecommerce contribution and ESOP expenses. Margins are expected to normalize to 2.7–3% over upcoming quarters.
Growth is expected from the PC replacement cycle, rising demand for AI-enabled PCs, expansion of the brand portfolio, and participation in large potential deals, including the opportunity with Dell.
The stock retains a BUY rating with a target price of ₹505, based on 12x Sept’28E EPS. The earlier target price was ₹525.
Key risks include delay in PC replacement cycle, supply chain issues for critical components such as CPUs and GPUs, and slower-than-expected wins in data center–related deals.
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Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
“Monarch House”, Opp Prahladbhai Patel garden, Near Ishwar Bhuvan, Commerce Six Roads, Navrangpura, Ahmedabad – 380009
Mumbai
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