Detailed Narrative
Strong Q1 FY26 Performance Excluding Large Deals
Rashi Peripherals reported a consolidated revenue of ₹3,152.1 crores for Q1 FY26. While this represented a 26% decline year-on-year due to the absence of a large project deal from the previous year, the company achieved an actual revenue growth of 11.4% when excluding this one-off📎 impact. This performance was driven by a strong focus on run-rate business and operational efficiencies across multiple brands and regions, with channel business growing the fastest.
Significant Profitability Expansion
The company demonstrated significant profitability improvements in Q1 FY26. EBITDA grew 23% to ₹111.4 crores, and PAT increased 12.1% to ₹61.7 crores compared to Q1 FY25. This led to a substantial 140 basis points expansion in EBITDA margin, reaching 3.5%, and a 70 basis points rise in PAT margin to 2%. Management noted that while the current EBITDA margin is high, the long-term sustainable annualized range is expected to be 2.7-2.8%.
Strategic Market Positioning and AI Focus
Rashi Peripherals is strategically positioned to capitalize on the growing PC and AI hardware market in India, leveraging its extensive distribution network across 52 cities. The company is actively expanding its AI solutions penetration, which is delivering substantial results. The market is seeing significant investment from global tech players, with Dell introducing AI-powered PCs, Lenovo scaling up local manufacturing to produce all PCs for the Indian market within three years, and ASUS projecting 30% growth in AI/gaming PCs for 2025.
New Brand Additions and Segment Growth
The company added four strategic brands to its portfolio: MSI (gaming laptops), Norden (networking passive components), Riello (UPS inverters), and ALOGIC (accessories), many with local manufacturing in India. The embedded vertical segment showed robust growth of 38% Q1-to-Q1, driven by increased demand from the automobile sector. The quick commerce business is also a key focus, with expectations to more than double its business this year.
Working Capital and Debt Management
Working capital days increased to 73 in Q1 FY26, up from an average of 50-55 days. This increase was primarily attributed to a delayed sizable debtor payment, expected to normalize📎 within 10-15 days, and strategic early payments to brands for incentives. Gross debt as of June 30, 2025, stood at ₹1,190 crores, with net debt being almost similar. Management clarified that the increase in interest cost was due to this enhanced working capital investment.
Divestment of ZNet Technologies and Cloud Strategy
Rashi Peripherals divested its entire 51% stake in ZNet Technologies during the quarter. This decision was part of a revised cloud strategy, as an initial small investment in a firm to learn the cloud business did not achieve profitability within the expected 4-5 year timeframe. The company decided to exit this venture and redraw its approach to the cloud business, which it continues to explore.
Outlook and Growth Aspirations
Management maintains an aspiration to achieve double the market growth rate, targeting a minimum of 2x growth if the PC market grows by 6% annually. They anticipate the PC market to grow 8-10% in Q2 and 12-14% in H2, driven by the impending end of Windows 10 support, though adoption is expected to be gradual. The government's 10,000 GPU order is expected to finalize in Q2, presenting a potential large deal opportunity, which the company will evaluate based on margins and ROCEs.