Rashi Peripherals Limited: IPO Analysis

The Indian tech giant Rashi Peripherals Limited (RPL) is all set to tap the public market with its much-anticipated INR 600 crore IPO! Are you excited to own a piece of this company in the Information and Communication Technology (ICT) distribution landscape?

In today’s blog, we will share the key details about the IPO and a brief overview of the company. 

Key details of the IPO

1. Rashi Peripherals IPO is a book-built issue of INR 600 crores. The issue is completely fresh and will be opening for subscription from February 7, 2024, to February 9, 2024.
2. Rashi Peripherals IPO is a main-board IPO, which means the post-issue capital is more than 10 crores.
3. The price band of IPO is INR 295 to INR 311 per share.
4. The listing date for Rashi Peripherals IPO is fixed at February 14, 2024.
5. JM Financial Limited and ICICI Securities Limited are the book-running lead managers of the Rashi Peripherals IPO, whereas Link Intime India Private Ltd is the registrar for the issue.
6. The fund’s return process is scheduled for Tuesday, February 13, 2024.
7. The company will be listed on both the exchanges, i.e., NSE & BSE.
8. The company promoters are as follows – Krishna Kumar Choudhary, Sureshkumar Pansari, Kapal Suresh Pansari, Keshav Krishna Kumar Choudhary, Chaman Pansari, Krishna Kumar Choudhary (HUF), and Suresh M Pansari HUF.
9. Rashi Peripherals IPO’s objective is to raise capital from the market is to fund working capital requirements and prepayments and repayments of borrowings.

Category of Investors	Allocation of shares
Employees	No employee quota
Anchor Allocation	Carved out of the QIB Portion
QIB Shares Offered	96,46,302 shares (50% of the net IPO offer size)
NII (HNI) Shares Offered	28,93,891 shares (15% of the net IPO offer size)
Retail Shares Offered	67,52,411 shares (35% of the net IPO offer size)
Total Shares Offered	1,92,92,604 shares (100.00% of IPO size)

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Company Overview

Rashi Peripherals was incorporated in the year 1989 and carries experience of more than 33 years. The company took its time in rising to glory, and now it is one of the leading national distributors of global technology brands in India for Information and Communications Technology (ICT) products. It also offers end-to-end value-added services such as pre-sale activities, solutions design, technical support, marketing services, credit solutions, and warranty management services.

The company also operates in Singapore. It has two subsidiaries – Znet Technologies Private Limited in India and Rashi Peripherals Pte Limited in Singapore.

Business Model

Rashi Peripherals operates in the following two business verticals:

• PES (Personal Computing, Enterprise, and Cloud Solutions) – Under this vertical, the company distributes personal computing devices, enterprise solutions, embedded designs/ products, and cloud computing. These include Laptops, Desktops, Routers, and Switches.
• LIT (Lifestyle and IT essentials)– LIT includes the distribution of products such as graphic cards, CPUs, motherboards, storage and memory devices, lifestyle peripherals, and accessories that include keyboards, mouse, web cameras, monitors, wearables, casting devices, fitness trackers and gaming accessories, power equipment such as UPS and inverters, and networking and mobility devices.

Rashi Peripherals holds 50 branches that operate for sales and service centres, and 63 warehouses as of September 30, 2022. The company has a direct presence in 680 locations in India and 53 global technology brands, with 9,996 customers in FY23.

Distribution Channel

Rashi Peripherals has a vision of being a multi-channel pan-India distributor and leader with an emphasis on general trade, modern trade and e-commerce channels.

• General trade includes hybrid resellers who sell to online marketplaces and retail channels, regional distributors, retailers, brand stores, original equipment manufacturers, etc., which are collectively known as ‘Channel Partners’.
• Modern trade includes large-format retail, multi-format retail, and small-format retail chains.
• E-commerce includes some of India’s leading online marketplaces.

Over the years, Rashi Peripherals has consistently added new global technology brands to its portfolio and worked with them to distribute products across categories. Some of the top brands distributed by the company are: Asus, Fitbit, HP, Intel, Lenovo, LG, Philips, Samsung, Logitech, and Luminous.

Key Strengths

1. RPL ranks among the fastest-growing distribution partners in India’s ICT distribution market and offers a well-established channel across India.
2. The Indian tech sector is expected to witness growth, which will eventually benefit the Rashi Peripherals distribution business.
3. Return on Equity (RoE) stands at a comfortable 19.33%.  
4. The industry is low capital-intensive, thus RPL does not manufacture any of its products, which indicates that the requirement to take further debt is substantially low.
5. Repeat customers bring in almost 92% of revenue while maintaining a 6.3% growth in total customers. This indicates the company’s strong ability to retain and satisfy customers.
6. The company has a high trade receivable turnover ratio, indicating that it is very efficient in collecting receivables from its clients.

Weak Points

1. The Information and Communication Technology (ICT) industry in India is highly competitive (Indian competitors include Savex Technologies Private Limited, Ingram Micro India Private Limited, and Redington (India) Limited). Both domestic and foreign players can significantly affect the top-line figures of the company.
2. The company’s net profit margin stands at 1.3%, but the industry generates profit from volume rather than margins.
3. The top 8 suppliers account for almost 83% of the total purchases. Any changes in the contracts with these suppliers could cause significant damage to the company’s financials as RPL does not manufacture any of its products.
4. RPL’s Inventory turnover ratio decreased significantly in FY23, this may indicate the company’s inability to manage inventory well.

Awards & Recognitions

• Digital Terminal Most Preferred National Distributor 2023
• VAR India VAD Award 2022
• Samsung MSP Solutions Champion 2023
• Digital Terminal Best ICT National Distributor in India 2023
• LG Most Dynamic National Distributor in 2022
• Intel Partner of the Year Award 2022,
• HP Most Trusted and Preferred Distributor Award 2022
• Samsung Top Distributor Partner in B2B Business in 2022

Highlights of Financial Statements

Particulars	FY 2023	FY 2022
Revenue/Total Income	INR 9,469 crore	INR 9,322 crore
Profit-after-Tax	INR 123.34 crore	INR 182.51 crore
Return on Equity Ratio	19.33%	37.56%
Debt to Equity Ratio	1.53	1.52
Inventory Turnover Ratio	6.62	9.93
Trade Receivables Turnover Ratio	9.34	9.58
Trade Payables Turnover Ratio	8.83	10.52
Debt Service Coverage Ratio (DSCR)	0.2	0.26

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We can say that the company experienced a minor growth in its revenue in FY 2023 as compared to the previous financial year. However, profit margins were decreased due to a larger decrease in profits.

Conclusion

To wrap it up, Rashi Peripherals Limited IPO is a mainboard and medium-risk investment. Although the company holds a strong track record and a wide network of distributors and operates in a competitive industry. It is suggested that investors carefully assess the risks and other factors before investing in the IPO.

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