Retail investors have the option to bid for a minimum of 48 shares, constituting a single lot, and may bid for a maximum of 13 lots. The minimum investment required from retail investors would be ₹14,160. The IPO reserved 50% of the issue for QIB, 35% for retail investors, and 15% for NII investors.
About Rashi Peripherals
Rashi Peripherals is among the national distribution partners for global technology brands in India for information and communication technology (ICT) products such as computers, components, peripherals and accessories, servers, enterprise, and embedded solutions and services.
With the liberalization of the Indian IT sector in 1991, the company moved into the distribution of ICT products from global technology brands in India.
The company was instrumental in facilitating the entry of several global technology brands and was among the select players who led the formalization of fragmented and unorganized ICT product distribution in India.
Between fiscal 2002 and the six months ended September 30, 2022, the company distributed 293.63 million units of ICT products. It expanded its distribution network across India and, as of September 30, 2022, it had one of the largest ICT product distribution networks in India, according to the company’s RHP report.
Business verticals
Rashi Peripherals primarily operates two business verticals: Personal Computing, Enterprise, and Cloud Solutions (“PES”) and Lifestyle and IT Essentials (“LIT”). It distributes products mainly through three channels, including general trade, modern trade and e-commerce.
Various global partnerships
As of September 30, 2023, the company was a national distribution partner for 50 global technology brands that including ASUS Global Pte. Ltd., Dell International Services India Pvt Ltd, HP India Sales Pvt Ltd, Lenovo India Pvt Ltd, Logitech Asia Pacific Ltd, NVIDIA Corporation, Intel Americas, Inc., Western Digital (UK) Ltd, Schneider Electric IT Business India Pvt Ltd, Eaton Power Quality Pvt Ltd., ECS Industrial Computer Co., Ltd., Belkin Asia Pacific Ltd., TPV Technology India Pvt Ltd., LG Electronics India Pvt. Ltd., and Toshiba Electronic Components Taiwan Corporation.
Marketing opportunity
India has a large addressable market for the personal computing segment, including peripherals, storage, tablets, mobile phones and accessories, cloud services and server businesses. The market was approx ₹3,450 billion in 2020, which is projected to grow to approx ₹6.379 billion by 2025.
This growth is driven by several key factors, including increasing use of technology in general, focus on e-governance and digitization, increasing data volume, efficient supply chain solutions and e-commerce platforms that enable the growth of the industry.
Business forces
The company stands out as a leading and rapidly expanding distribution partner for information and communication technology products in India. Its extensive and multi-channel distribution network covers the entire nation, supported by a robust internal infrastructure.
It has established lasting relationships with renowned global technology brands, fostered by a committed engagement strategy with customers. Additionally, it boasts a diverse and comprehensive product portfolio, offering value-added solutions, as highlighted by the company in its RHP report.
Objectives of the matter
From the net proceeds of the recent issue, the company proposes to use ₹326 crore for prepayment or scheduled repayment of all or part of certain outstanding loans availed, upto ₹220 crore for financing working capital requirements, and the balance amount of the net proceeds will be used for general corporate purposes.
Book-running senior managers
JM Financial and ICICI Securities are the book-running lead managers for the Rashi Peripherals IPO, while Link Intime India is the IPO registrar.
Financial performance and return metrics
From fiscal 2020 to fiscal 2022 and the six months ended September 30, 2022, the company showed consistent growth in income from operations, EBITDA, and represented profit after tax. The income from operations followed an upward trajectory, reaching ₹39,344.82 million, ₹59,250.48 million, ₹93,134.38 million, and ₹50,238.09 million in Fiscal 2020, 2021, and 2022, and the six months ended September 30, 2022, respectively. Notably, it recorded a compound annual growth rate (CAGR) of 53.85% between fiscal 2020 and fiscal 2022.
The reformed profit after tax showed an increase of ₹382.31 million in Fiscal 2020 to ₹1,363.50 million in Fiscal 2021, ₹1,825.11 million in Fiscal 2022, and beyond ₹673.75 million in the six months ended September 30, 2022. At the same time, EBITDA increased from ₹938.58 million in Fiscal 2020 to ₹2,152.27 million in Fiscal 2021, ₹3,052.17 million in Fiscal 2022, and onward to ₹1,365.12 million in the six months ended September 30, 2022, its RHP showed.
Key risks
The company, although it excels in distribution, does not manufacture the information and communication technology (“ICT”) products it sells. These products, sourced from global technology brands, are distributed through general trade, modern trade, and e-commerce channels.
The company said it has significant credit exposure to its channel partners and other customers, and it said any negative trends in their businesses could cause the company significant credit losses and adversely affect the company’s cash flow and liquidity.
Additionally, reliance on third-party transportation providers for product delivery and warehousing services in Chennai, Tamil Nadu, introduces operational vulnerability.
Details of subpoenas
Rashi Peripherals’ IPO allotment is likely to be completed on February 12, while the company will initiate repayments on February 13. It will credit the shares to the demat accounts of the eligible allottees on the same day. The shares of Rashi Peripherals will be listed on both the stock exchanges, BSE and NSE, on February 14.
Should you subscribe to the IPO?
Leading domestic brokerage firm Sushil Finance has recommended investors to ‘subscribe’ to the issue with a long-term view. “The company is asking a PE multiple of 10.54x at the upper end of the price band and uses diluted EPS for FY23 ( ₹29.5) and a PE of 8.53x annual diluted EPS for H1FY24 ( ₹18.24). The industry average is 9.92x. The issue appears fully priced,” the brokerage said.
Another domestic brokerage firm, Swastika Investmart, also recommended a “subscribe” rating to the IPO, citing the company’s future growth potential and the positive industry outlook.
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 06 Feb 2024, 15:47 IST