Rashi Peripherals Limited

Rashi Peripheral reported a robust Q2 FY26 with revenues reaching ₹41,554 million, marking a 12.1% year-on-year increase. Excluding large project deals, the core business demonstrated an even stronger growth of 20% year-on-year. The company's unit growth for the quarter was impressive at 16-16.5% year-on-year, significantly outperforming the overall market's unit growth of 8%. This performance underscores the effectiveness of the company's diversified portfolio and market penetration strategies.

The company expanded its distribution network by opening two new branches in Nanded and Baramati, Maharashtra, aiming to strengthen nationwide coverage. A significant development was the commencement of the Dell Commercial Technologies business, which booked a small token revenue in Q2 FY26, but is expected to generate substantial revenue in Q3 and accelerate growth in Q4. Management estimates the total Dell commercial business in India to be around $3 billion, presenting a considerable opportunity for Rashi Peripherals. Additionally, the company introduced an ESOP program, provisioning ₹72.17 million this quarter, to foster employee ownership and retention.

For Q2 FY26, EBITDA stood at ₹1,081 million with a margin of 2.6%, while PAT was ₹592.2 million, translating to a 1.4% margin. Adjusted PAT, excluding extraordinary items^📎, grew 7.4% year-on-year to ₹664 million. For H1 FY26, adjusted PAT increased 9.7% year-on-year to ₹1,281 million, with an EBITDA margin of 3%. The company successfully collected the entire ₹280 crores receivable from a large project deal, contributing to a positive cash flow. The debt-equity ratio is currently 0.49x, and the cost of debt is comfortable at 7.6-7.8%, indicating sound financial health and capacity for future investments.

Management highlighted the ongoing Windows refresh cycle and the growing demand for AI-based laptops. A normal PC in India costs approximately ₹40,000, whereas an AI PC is priced significantly higher at ₹75,000-₹80,000. While AI consumption is currently around 20%, it is expected to increase rapidly in the next year due to new implementations and applications. The refresh cycle, particularly from the corporate sector, is anticipated to drive demand for more efficient and premium products, signaling a shift towards higher-value offerings.

Despite increasing competitive intensity, Rashi Peripherals maintains its growth trajectory by leveraging its wide product portfolio, extensive presence across 54 locations, and prudent management. The enterprise segment, excluding large deals, grew by 30-50% year-on-year. A potential risk identified is the global shortage of components like CPU, memory, SSD, and hard drives, driven by high demand from data centers. While this could impact revenue, management's feedback from suppliers suggests the ability to maintain supply, categorizing it as a potential but unlikely risk that could last for a couple of quarters.