Rashi Peripherals up 4% after receiving ₹1,511 crore order

Shares of Rashi Peripherals nearly 4% in afternoon trade after the company said it had received an order worth ₹1,511 crore from NMDC Data Centre. The order pertains to supply of information and communication technology (ICT) products.

Rashi Peripherals is a leading distributor of ICT products, having 50 branches and service centres across India. It has tied up with 52 global brands, including Dell, HP, Lenovo, NVIDIA and Asus, to sell products across its two verticals: personal computing, enterprise and cloud solutions (PES) and lifestyle and IT essentials (LIT).

The company made its debut on the stock exchanges in February this year – its shares are trading about 12% higher compared to its IPO price of ₹311.

The company’s revenue has increased from ₹3,917 crore in 2020 to ₹9,262 crore in 2023 with the bulk of the surge coming from demand for IT hardware post COVID. Profit also zoomed nearly 3X during the same period from ₹42 crore to ₹123 crore. The company enjoys a good return of equity of 17.86% (even though it has come off from 31.7% in the previous year). Debt-to-equity remains slightly higher at 1.55. Its margin remains on the lower side as the company is a distributor rather than a manufacturer.

The company is backed by investors such as Madhusudan Kela and said it will use its IPO proceedings to halve its debt-to-equity ratio to less than 1 by halving its debt.

The company has failed to generate a positive cash flow over the past three years, but in a recent interview, the management said that was because of its high debt, which it’s planning to reduce. The company forecasts turning cash flow positive over the next two to three years, the management added.

Rashi Peripherals enjoys a leading market share of about 40-50% in businesses such as CPUs, motherboard, hard drives, keyboards and mice. The company is also planning to venture into newer areas, such as data centres.