Rashi Peripherals Limited

Rashi Peripherals reported a consolidated total income of ₹2,973.2 crores for Q4 FY25, marking a 1% YoY decline. Despite this, EBITDA grew 30% YoY to ₹96 crores, with PAT increasing 12.1% to ₹52.7 crores. For the full financial year 2025, the company achieved robust growth, with total income rising 24.1% YoY to ₹13,772.7 crores, EBITDA increasing 17.5% to ₹360.9 crores, and PAT surging 45.8% to ₹209.7 crores. The Q4 revenue dip was attributed to a high base from Q4 FY24, a flattish H2 market, and slower payment collections.

The company aims for 'double digit higher, higher double digit' topline growth in the coming year, building on its historical 21% CAGR. Strategic priorities for FY26 include deeper market penetration, strengthening channel relationships, and expanding reach by adding new partners and locations. Rashi Peripherals is also focused on innovation in technology, particularly AI, and anticipates a significant boost from the Microsoft refresh cycle, which is expected to drive laptop replacement demand from Q3 FY26 onwards, especially in the commercial segment.

Following a substantial ₹1,500 crore AI data center order executed in the previous financial year, Rashi Peripherals is adapting its strategy. The current focus is shifting from large, single data center units to smaller, multiple data centers across various locations and users. Management believes the government's AI mission will serve as a significant catalyst for AI demand in the country, and while individual deal sizes may be smaller, multiple opportunities are in the pipeline.

The company has successfully established a new embedded solutions business, generating over ₹100 crores in revenue in FY25 and achieving profitability. This segment involves semiconductor chips, with strategic tie-ups with key players like NVIDIA, Intel, Elmos, Micron, and Western Digital. Rashi Peripherals has invested in a Bangalore-based laboratory for design and testing, targeting manufacturing and automobile customers. Management views this segment as a high-margin opportunity, currently at the 'tip of the iceberg' in India's $2 billion semiconductor market.

The working capital cycle remained stable at 54 days in FY25, with inventory improving by 4 days. The company's ROE stood at 12.6% and ROCE at 13.1% as of March 31, 2025. Management aims to improve ROE to 15% within 1-2 years, with a long-term target of 17-20%, attributing the current dip to growth capital infusion. While Q4 EBITDA margin was 3.23%, the company considers an annual margin of 2.5% more representative for the sector.

Rashi Peripherals reported a debt of ₹900 crores, with management indicating flexibility in debt requirements based on growth opportunities. A significant M&A update was the termination of the previously announced acquisition plan for Satcom Infotech. This decision was made because the conversation did not proceed as per plan and certain expectations were not met. However, the company remains committed to entering the software reselling segment and is redrawing its strategy for future engagement.