Rashi Peripherals Ltd Upgraded to Buy on Strong Financial and Technical Performance

Quality Grade Upgrade Reflects Strong Operational Performance

The quality grade for Rashi Peripherals has been upgraded from average to good, signalling enhanced operational efficiency and financial health. Over the past five years, the company has delivered a commendable sales growth rate of 17.58% and an even stronger EBIT growth of 22.05% annually. These figures underscore the company’s ability to expand its core business profitably.

Financial stability is further evidenced by an average EBIT to interest coverage ratio of 3.25, indicating comfortable interest servicing capacity. Although the debt to EBITDA ratio stands at 4.11, which is moderately leveraged, the net debt to equity ratio remains low at 0.48, reflecting prudent capital structure management.

Efficiency metrics such as sales to capital employed at 4.55 and a tax ratio of 24.35% demonstrate effective utilisation of resources and consistent tax compliance. The company’s return on capital employed (ROCE) and return on equity (ROE) averages of 10.98% and 10.87% respectively, confirm solid returns for investors. Additionally, the absence of pledged shares and a reasonable institutional holding of 19.11% add to the company’s quality credentials.

Compared to its industry peers, Rashi Peripherals stands out with a ‘good’ quality rating, while many competitors remain at average or below average levels. This improvement in quality grade was a key driver behind the upgrade in the overall investment rating.

Valuation Grade Shifted to Attractive Amid Reasonable Multiples

Rashi Peripherals’ valuation grade has moved from very attractive to attractive, reflecting a slight re-rating while maintaining a compelling investment case. The company currently trades at a price-to-earnings (PE) ratio of 10.46, which is modest relative to the IT hardware sector and its peers. The price-to-book value stands at 1.37, indicating the stock is reasonably priced in relation to its net asset value.

Enterprise value multiples further support the attractive valuation thesis: EV to EBIT is 8.69, EV to EBITDA is 8.28, and EV to capital employed is a low 1.25. These multiples suggest the market is valuing the company conservatively despite its improving fundamentals.

The PEG ratio of 0.36 highlights that earnings growth is not fully priced in, offering upside potential. Dividend yield remains modest at 0.52%, consistent with the company’s focus on reinvestment and growth. The latest ROCE and ROE figures of approximately 10.9% reinforce the company’s ability to generate returns above its cost of capital, justifying the current valuation.

Compared to peers such as Elitecon International and Lloyds Enterprises, which are classified as very expensive, Rashi Peripherals offers a more compelling risk-reward profile. This valuation improvement has contributed to the upgrade in the overall mojo grade to Buy.

Financial Trend Shows Consistent Profitability and Growth Momentum

Rashi Peripherals has demonstrated a positive financial trend, with the company reporting strong quarterly results for four consecutive quarters. The operating profit growth rate of 22.05% annually is a testament to the company’s expanding profitability. The latest half-year ROCE peaked at 13.00%, while quarterly PBDIT reached a high of ₹118.93 crores and PBT before other income stood at ₹86.59 crores, marking record highs.

Over the past year, the stock has delivered a return of 18.53%, significantly outperforming the Sensex’s 6.66% return and the broader BSE500’s 7.87%. This market-beating performance is supported by a 29.3% increase in profits, underscoring the company’s robust earnings momentum.

Despite the strong recent performance, the company maintains a conservative dividend payout ratio of 4.67%, signalling a balanced approach between rewarding shareholders and funding growth initiatives.

Technical Indicators Turn Bullish, Supporting Positive Outlook

The technical grade for Rashi Peripherals has been upgraded from mildly bullish to bullish, reflecting a stronger momentum in the stock price. Key technical indicators such as the Moving Average Convergence Divergence (MACD) on the weekly chart are bullish, supported by bullish Bollinger Bands on both weekly and monthly timeframes.

Daily moving averages confirm a bullish trend, while the Know Sure Thing (KST) indicator on the weekly chart also signals positive momentum. Dow Theory assessments remain mildly bullish on both weekly and monthly scales, indicating a sustained upward trend.

On-balance volume (OBV) shows mildly bullish signals on the weekly chart, suggesting accumulation by investors. The stock’s price action has been strong, with the current price at ₹385.35, up 5.75% on the day, reaching a high of ₹410.50, which is also the 52-week high.

These technical developments complement the fundamental improvements, providing a well-rounded basis for the upgrade to a Buy rating.

Comparative Performance and Market Position

Rashi Peripherals operates in the IT hardware sector, a segment characterised by rapid technological evolution and competitive pressures. Despite these challenges, the company has managed to sustain healthy growth and profitability, as reflected in its mojo score of 78.0 and a current mojo grade of Buy, upgraded from Hold on 4 February 2026.

The company’s market capitalisation grade remains at 3, indicating a mid-sized market cap with room for growth. Its stock has outperformed the Sensex and broader market indices over multiple time horizons, including one week (8.12% vs 1.79%), one month (7.62% vs -2.27%), year-to-date (7.52% vs -1.65%), and one year (18.53% vs 6.66%).

While the company’s five-year and ten-year returns are not available, the recent performance and fundamental improvements suggest a positive trajectory. The stock’s 52-week low of ₹245.00 and high of ₹410.50 illustrate significant price appreciation potential, with the current price near the upper range.

Investors should note that the company’s debt levels, while manageable, require monitoring, especially given the debt to EBITDA ratio of 4.11. However, the strong interest coverage ratio and low net debt to equity mitigate immediate concerns.

Outlook and Investment Implications

The upgrade to a Buy rating for Rashi Peripherals Ltd is well supported by a confluence of factors. Improved quality metrics demonstrate operational strength and financial discipline. Attractive valuation multiples relative to peers provide a margin of safety and upside potential. Positive financial trends highlight consistent earnings growth and profitability, while bullish technical indicators confirm strong market sentiment.

For investors seeking exposure to the IT hardware sector with a company exhibiting solid fundamentals and market-beating returns, Rashi Peripherals presents a compelling opportunity. The company’s ability to sustain growth, manage leverage prudently, and maintain shareholder value through dividends and capital efficiency will be key to its continued success.

Given the current market conditions and the company’s performance, the upgraded Buy rating by MarketsMOJO reflects a favourable risk-reward profile for medium to long-term investors.

Risks to Consider

Despite the positive outlook, investors should remain cautious of sector-specific risks such as supply chain disruptions, rapid technological changes, and competitive pricing pressures. Additionally, the company’s moderate leverage requires ongoing scrutiny, especially if interest rates rise or earnings growth slows.

Market volatility and macroeconomic factors could also impact stock performance in the short term. Therefore, a balanced approach with regular monitoring of quarterly results and market developments is advisable.

Conclusion

Rashi Peripherals Ltd’s upgrade from Hold to Buy is justified by its enhanced quality grade, attractive valuation, strong financial trends, and bullish technical signals. The company’s consistent earnings growth, efficient capital utilisation, and market outperformance position it favourably within the IT hardware sector. Investors looking for a fundamentally sound and technically supported stock may find Rashi Peripherals a worthy addition to their portfolios.

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