Rashi Peripherals Limited’s IPO is scheduled to open for subscription on February 7, 2024. The company sells global technology brands in India. In this article: Rashi Peripherals IPOincluding information, reviews and analysis about the company, financials, IPO valuation, and gray market premium (GMP).
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Rashi Peripherals IPO Details
| IPO start date | February 7, 24 |
| IPO deadline | February 9, 24 |
| IPO listing date | February 14, 2024 |
| Type of problem | Book Built Issue IPO |
| face value | 5 rupees per share |
| IPO price range | 295 rupees to 311 rupees per share |
| lot size | 48 stocks |
| Exhibition location | BSE and NSE |
| Total publication size | Rs. 600 million |
About Rashi Peripherals Limited
The company has become one of the leading domestic distribution partners of global technology brands for information and communication technology (ICT) products in India in terms of revenue and sales network in FY2023.
The company is also one of the fastest growing domestic distribution partners of global technology brands in India in terms of revenue growth from FY2021 to FY2023.
Operating revenue grew at a CAGR of 26.32% from Rs 59,250.48 crore in FY21 to Rs 94,542.79 crore in FY2023 to Rs 54,685.10 crore for the six months ended September 30, 2023 .
The company differentiates itself by providing end-to-end services, including pre-sales activities, solution design, technical support, marketing services, credit solutions, and warranty management services.
Financial overview of Rashi Peripherals Limited
| Fiscal year end/period end (amount in billions) | ||||
| Period ends | March 31, 2021 | March 31, 22 | March 31, 23 | September 30, 23 |
|---|---|---|---|---|
| assets | 1,594.39 | 2,669.76 | 2,798.60 | 4,058.64 |
| revenue | 5,930.24 | 9,321.92 | 9,468.95 | 5,473.27 |
| Profit after tax | 136.35 | 182.51 | 123.34 | 72.02 |
| net worth | 394.19 | 575.07 | 700.12 | 772.74 |
| reserves and surplus | 395.99 | 557.84 | 760.36 | 686.24 |
| Total loan amount | 488.99 | 881.74 | 1,065.76 | 1,395.20 |
Rashi Peripherals IPO Valuation
- IPO price range ranges from Rs 295 to Rs 311 per share
- Considering the last three years’ weighted EPS of Rs 34.47, the P/E ratio is 9x.
- Considering last year’s FY2023 EPS was 29.5 rupees, the P/E ratio is 11 times.
- Annualized EPS for the six months ending September 2023 yields a P/E ratio of 9x.
- Its only peer is Redington India Limited, which trades at a P/E ratio of 10x. Therefore, the IPO price range of 11x to 9x P/E is perfectly priced.
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Rashi Peripherals IPO GMP (Gray Market Premium)
- According to IPO Watch, the gray market premium (GMP) for Rashi Peripherals Hotels IPO stands at Rs 25.
- Data from Investorgain shows fluctuations in GMP, which has increased from 0 to 25 rupees in the past few days.
Rashi Peripherals IPO – Positive aspects
- The company is India’s leading and fastest growing distribution partner for information and communication technology products.
- Driven by a dedicated customer engagement strategy, the company has built long-term relationships with leading global technology brands.
- The company has a diverse and comprehensive product portfolio and solutions with a scalable business model supported by an advanced technology stack.
- Revenues have increased significantly over the past few years.
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Rashi Peripherals IPO – Risk Factors
- The company relies on products it sells to various vendors, which are global technology brands, and which represent more than 82% of its operating revenues. Delays or failures in product supply on the part of some of these global technology brands could have a material adverse effect on their business.
- The Company’s business relies on global technology brands that maintain standard quality products, including effectively maintaining, promoting and developing their brands and regularly launching new information and communications technology products.
- If a company is unable to maintain relationships with its channel partners or customers, or if any of these parties change the terms of its arrangements with channel partners, its business could be materially and adversely affected.
- Because our gross profit margin is low, fluctuations in revenue, operating costs, bad debts, and interest expense have a greater impact on our operating results.
- They rely on relationships with certain online marketplaces, and disruptions to such relationships or changes in business practices could adversely affect the company’s business.
- They have witnessed negative cash flows in the past.
- The company’s EBITDA margin was 3.63% in FY2021, which declined to 3.28% in FY2022, and further declined to 2.83% in FY2023. There is no guarantee that we will be able to maintain our EBITDA margins in the future.
- Investors should consider all risk factors set out below. IPO RHP
Rashi Peripherals IPO Review and Conclusion
- Rashi Peripherals Limited distributes global technology brands in India. Services provided include value-added services such as pre-sales, technical support, marketing services, credit solutions, and warranty management services. The company has experienced significant revenue growth in the past.
- The downside is that the company relies on vendors that are global technology brands. Corporate profit margins are on the decline. We have experienced negative cash flow in the past.
- There is only one publicly traded peer and the stock is well priced when compared to its P/E ratio.
Investors who understand all the risk factors can invest in this IPO.
P/E, or price-to-earnings ratio, is a financial metric used to evaluate the valuation of a company’s stock. It is calculated by dividing a company’s stock’s current market price by its earnings per share (EPS). Essentially, it represents the amount investors are willing to pay for each dollar of profit a company generates.
The formula for calculating PER is as follows:
P/E ratio = Market price per share / Earnings per share (EPS)
- Market price per share: This is the current price at which the company’s shares are traded on the stock market.
- Earnings per share (EPS): This is the portion of a company’s profits that is allocated per share of outstanding common stock. It is calculated by dividing a company’s net income by the total number of shares outstanding.
P/E ratio is a metric commonly used by investors to assess whether a stock is overvalued, undervalued, or fairly valued relative to its earnings and general market conditions. is. PER is interpreted as follows:
- High PER: A higher P/E ratio usually indicates that investors are willing to pay more per unit of income. While this could indicate that the stock is overvalued, it could also reflect strong growth prospects or investor optimism about the company’s future earnings potential.
- low PER: A low P/E ratio may suggest that the stock is undervalued relative to its earnings. This may indicate that the market has low expectations for the company’s future growth and profitability.
- Comparable analysis: P/E ratio is often used to compare companies within the same industry or sector. Investors often compare P/E ratios of different companies to assess relative valuations and investment opportunities.
The gray market premium is the difference between the unofficial market price and the official issue price of newly issued IPO shares. It reflects investor sentiment and demand before a stock is listed on a stock exchange. A positive premium indicates strong demand, while a negative premium indicates low interest. Gray market trading is speculative and unregulated.
- Evaluate company fundamentals such as growth, profitability, and financial health.
- Analyze market opportunities and industry trends.
- Consider the experience and credibility of the management team.
- Assess IPO valuations relative to peers and industry standards.
- Understand the planned use of IPO funds.
- Assess risks associated with business, industry, and market conditions.
- Consider the underwriter’s reputation.
- Consider lock-up agreements to limit post-IPO insider sales.
DRHP (Red Herring Draft Prospectus) A preliminary document that a company submits to regulators before an IPO. It does not include final details such as issue price, but provides a summary of important information about the company.
RHP (Red Herring Prospectus) An updated version of the DRHP that includes final IPO details such as issue price and number of shares offered. This is a document submitted after regulatory approval and used by investors to make investment decisions.
To decide whether to invest in an IPO:
- Let’s find out about the company.
- Review financials and market opportunities.
- Understand IPO details and valuations.
- Assess management and risk.
- Please consult your financial advisor.
- Consider diversification and long-term prospects.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
