Rashi Peripherals IPO Review – GMP, Finance & More

Rashi Peripherals IPO Review: The company is preparing to issue a new IPO of Rs. KRW 60 billion, scheduled to be released on the 7th^Day February 2024. This issue closes on the 9th.^Day Listed on the exchange on February 14th^Day February 2024. In this article, we will look at Rashi Peripherals IPO Review and analyze its pros and cons. Read on to understand about the company.

Rashi Peripherals IPO Review

About Us

The company was founded in 1989. The company’s unique selling point is its comprehensive value-added services, including marketing, credit solutions, warranty management, solution design, pre-sales activities and technical support.

The company produces computer peripherals. They have a pan-India distribution network of 50 sales points.

As of September 2023, we have 10,508 stock keeping units (SKUs) across 63 warehouses. They distributed and sold 34.38 million units from 53 global technology brands in FY23.

The company operates through two business segments:

Personal computing, enterprise and cloud solutions: In this space, Rashi distributes enterprise solutions, personal computing devices, cloud computing, and embedded designs/products.
Lifestyle and IT Essentials: This includes (i) components such as the motherboard and central processing unit (“CPU”); (ii) graphics cards and memory devices; (iii) Lifestyle peripherals and accessories, including keyboards, fitness trackers, monitors, web cameras, wearable devices, gaming accessories, mice, and casting devices. (iv) power equipment such as inverters and UPS; (v) Mobility and networking devices.

Industry introduction

India aims to foster its electronics manufacturing sector with key export products including mobile phones, IT hardware (laptops, tablets), home appliances (TVs, audio), industrial electronics, and automotive electronics.

Demand for IT hardware and software is increasing due to the introduction of new technologies such as artificial intelligence (AI) and machine learning that are driving industry growth.

The PLI scheme aims to boost trade activities and reduce dependence on imports by increasing production and assembly of products in India.

The Ministry of Electronics and Information Technology (MeitY) expects exports to reach $120 billion to $140 billion by 2026, out of a total target of $300 billion.

The National Electronics Policy, 2019 aims to establish India as a global hub for electronic systems design and manufacturing (ESDM) by nurturing domestic capabilities in key component development and creating a competitive global industrial environment.

Rashi Peripherals IPO Review – FinanceS

Rashi reported operating revenue of Rs. 9,454.27 crore in FY23, an increase of 1.51% from Rs. 9,313.43 crore in FY22. Net profit in 2023 was 10 million won. 1233.4 billion, down 32.42% from FY22. The increase in finance costs has impacted profitability, which has been increasing since FY21.

Rashi generates majority of its revenue from merchandise sales, which accounts for 99.48%, with the remaining 0.51% coming from services in FY23.

The company’s revenue exposure by region was 97.53% from overseas in FY23, up 0.34% year-on-year, with the remaining 2.46% coming from India, up 88.02%.

main players

Rashi’s listed associates are the larger Redington Ltd. In FY23, Redington’s revenue growth exceeded that of Rashi. Redington has an after-tax profit margin of 1.81% compared to Rashi’s 1.30%.

EBITDA margins for these two companies are relatively consistent, ranging from 2.83% to 2.85%. Because these companies have thin margins.

Rashi’s return on equity is 19.33% lower than its peers. The company’s debt-to-equity ratio is high at 1.53, while Reddington’s is 0.43.

strength Rashi peripherals

• Long-term relationships with global technology companies: The company prioritizes R&D and regularly launches new products through partnerships with global technology brands. Rashi uses strong supply chain capabilities to ensure product availability, promotes the brand through technology and consumer media advertising, and actively participates in media events.

• Diverse product portfolio and solutions: From fiscal 2002 to fiscal 2023, the company distributed 311.89 million units from global technology brands. Provides consistent product availability while meeting a wide range of customer needs across sub-segments such as IT Configuration and Lifestyle, Components, etc.

• Scalable Business: Rashi purchases from global technology brands and monitors demand through customer connections. Optimize inventory with targeted initiatives to improve fill rates and service levels using SAP software.

• PAN India location: It serves as a one-stop shop for B2B customers. They maintain a diverse mix of channels to avoid the risks associated with relying on just one channel. The company’s channel composition mainly consists of general trade, modern trade, and e-commerce channels.

Weakness Rashi peripherals

• Revenue Concentration: As of September 2023, distribution of products manufactured by Lashi’s top eight global technology brands accounted for 82.39% of revenue.

• Low gross margin: In the ICT industry in which our company operates, it is difficult to maintain or improve gross margins due to fierce price competition, overcapacity, and price cuts, and if demand is low, profitability may be affected.

• Product Liability: Selling ICT components at a price lower than the cost of the equipment may result in excessive damages claims. The distribution of defective products may become entangled in the process, and the finished product, rather than the distributed components, may be considered defective.

• Negative Cash Flow: Rashi’s cash from operations as of FY23 was -114.55 crore and as of September 2023, it was -285.67 crore. Over time, significant short-term negative cash flow could have a material impact on our ability to operate our business and execute our growth plans.

Rashi Peripherals Limited IPO Review – GMP

Shares of Rashi Peripherals Ltd were trading at a 27.33% premium in the gray market on February 5.^Day, 2024. Shares of Gray Market were traded at Rs. 396 This is the ceiling price of Rs 311 plus a premium of Rs 85 per share.

Key IPO Information

promoter: Krishna Kumar Choudhary, Suresh Kumar Pansari, Kapal Suresh Pansari, Keshav Krishna Kumar Choudhary, Chaman Pansari, Krishna Kumar Choudhary (HUF) and Suresh M. Pansari (HUF).

Book Operations Lead Manager: JM Financial Co., Ltd. and ICICI Securities Co., Ltd.

Proposal registered by: Link Intime India Pvt Ltd.

purpose Rashi Peripherals Limited IPO

1. To reduce the company’s outstanding borrowings.
2. Fund working capital requirements.

conclusion

Rashi Peripherals generates revenue through volume growth at low margins. The company operates like a trading company and its outlook is aligned with the demand for computers.

So what do you get from this company? Can we maintain our current margins to maintain our current profits? Or will the capital-intensive nature of the business significantly erode margins? What is your view? Let us know in the comments below.

Written by Santosh

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