Rashi Peripherals Ltd : A 20% + CAGR company
Powering Growth Through Digital Distribution
Company overview:
Rashi Peripherals Limited is one of India’s leading distributors for technology products, focusing on four main areas: personal computing, cloud solutions, lifestyle products, and IT essentials. The company partners with 61 global tech brands to supply essential components and services that keep IT infrastructure running smoothly. With over 35 years of experience, Rashi has built a strong reputation as a trusted partner, offering everything from inventory and warranty management to financial support for its distributors.
The company primarily operates in two business verticals:
Personal Computing, Enterprise, and Cloud Solutions (“PES”): Under this vertical company distributes personal computing devices, enterprise solutions, embedded designs/products, and cloud computing.
Lifestyle and IT essentials (“LIT”): This includes the distribution of products such as (i) components that include graphic cards, central processing units (“CPUs”) and motherboards; (ii) storage and memory devices; (iii) lifestyle peripherals and accessories that include keyboards, mice, web cameras, monitors, wearables, casting devices, fitness trackers, and gaming accessories; (iv) power equipment such as UPS and inverters; and (v) networking and mobility devices.
Business model:
Key Brands Rashi Peripherals Distributes:
PC and Laptop Brands:
HP, Lenovo, Asus, Dell, and Acer – For consumer and commercial laptops, PCs, and related accessories.
Graphic Cards and CPUs:
NVIDIA, AMD, and Intel – Market leaders in GPUs, CPUs, and high-performance computing components.
Storage Solutions:
Western Digital, Seagate, and SanDisk – For hard drives, SSDs, and portable storage devices.
Motherboards and Components:
Asus, Gigabyte, MSI, and ASRock – For motherboards and related PC components.
Peripherals and Accessories:
Logitech, AOC, and Samsung – For monitors, keyboards, mice, and other accessories.
Networking Equipment:
Cisco, Netgear, and others – For routers, switches, and networking solutions.
Enterprise IT Solutions:
Includes servers, storage, and infrastructure components for data centers and enterprises.
AI Laptops:
Partnerships with brands like Microsoft and others for next-generation AI-enabled laptops.
Market share in India of the products:
Rashi Position in the PC Market:
The PC segment contributes 42% to the total revenue of the company. This segment includes PC’s, desktops, and assembled desktops. Rashi has 10% market share in the Indian PC market
ASUS holds the No. 2 spot in consumer PCs, while Rashi leads Lenovo’s commercial distribution and rank as HP’s No. 3 distributor, thereby covering both consumer and commercial needs and building a comprehensive ecosystem
How will Rashi get benefit?
-AI laptops are expected to grow rapidly over the next two years as chip vendors scale GenAI capabilities for mainstream devices. With GenAI use cases expanding across edge, cloud, and hybrid environments, it will become a must-have feature in PCs. While the overall laptop market will grow at a 3% CAGR (2023-2027), the AI laptop segment will experience a 58.4% CAGR. The shift to higher-end GPUs and advanced semiconductors will drive value and increase the average selling price. AI laptops will be categorized into basic, advanced, and capable models, with the more advanced models performing complex GenAI tasks using NPUs and GPUs.
Data Center Growth Opportunity in India:
India, despite generating 20% of global data, holds only 3% of the data center capacity, with plans to quadruple its capacity in the next five years. This presents a massive opportunity as demand for servers, storage, networking, and power infrastructure grows. Rashi, a key distributor in this space, has a significant market share in routers and switches, and it recently won major contracts, including a Rs 15.1 Bn order from NMDC Data Center. As data localization becomes the norm, India’s data center market is rapidly expanding, with Rashi poised to capture a larger share.
Enterprise IT & Semiconductor Growth Drivers:
Rashi is expanding its enterprise segment, having executed deals worth Rs 20 Bn in H1FY25, including government and corporate projects. They are focused on delivering server, storage, and IT solutions across sectors like education and manufacturing, with a strategic approach that eliminates upfront capital costs. The government's push for emerging technologies, data localization policies, and cloud adoption are major growth drivers. In semiconductors, Rashi is tapping into a $1.5 billion market, with a promising start in embedded solutions. Partnering with top brands like NVIDIA and Intel, they aim to scale this segment significantly, with revenues projected to hit Rs 8-10 Bn by FY27-28.
From the fundamental view of the company:
Over the years, Rashi consistently maintained a sales CAGR of 23%+. Rashi is expanding its market presence and is capturing a larger share of the market. Rashi also shows impressive EBITDA growth with a 4-year CAGR of 45.1%, outpacing its peers; this shows effective cost management and benefits from economies of scale. Margin stability, especially at a high growth rate, indicates that Rashi is scaling up its operations without significantly increasing its costs.
On the basis of doing a rough valuation:
Assuming a CAGR of 20%, 18%, and 15% for FY25, FY26, and FY27 respectively, and a PAT growth of 20%, 22%, and 25% for the same period, the EPS for FY27 is projected to be ₹40 per share. Applying a P/E multiple of 15x, based on the current P/E ratio, the target price comes out to approximately ₹600 per share, representing an upside of 35% from the current price.
Although someone can play with numbers here, with a bull and base scenerio.
Note: Assuming the company gets orders for the data center work and growth of AI enabled laptops and if that happens, the P/E will get rerate.
There is a risk in the data center space because software generates higher margins compared to hardware products. This is because hardware, once set up, doesn't require frequent changes, and hardware products have lower margins.
Rashi is focusing on niche segments that offer higher margins, a potential 15%+ topline growth, and where they can add value to the brand. They have started supplying servers, switches, and cables for data centers in India and have already secured a few enterprise deals. The growth of AI-driven data centers presents a significant opportunity for Rashi, which could contribute over 10% to their topline in the coming years. Rashi has also entered the semiconductor market, initially focusing on a few components, with expectations of significant revenue from this segment by FY27. Additionally, Rashi is pursuing opportunities in government initiatives, such as the Rs 100 Bn AI GPU server project, which provides work orders rather than direct financial subsidies. The government's push for AI infrastructure and digital transformation is expected to generate more revenue for Rashi, particularly in server and storage solutions for enterprises.
Bottomline:
The company’s management is very optimistic about its future success. With its position as a preferred distribution partner for over 60 global technology brands and its long-term relationships, the company is well-positioned for growth. However, the data center industry needs to be closely monitored, as whether the company continues to receive orders could significantly impact its fundamentals going forward.
Note: This is just for educational purposes; kindly do your own research before any decision. Its just by POV.
Mohit Jain
Signing off!
Qoute for the day:
A business should be viewed as an unfolding movie, not as a still photograph.
—Warren Buffett