Rashi Peripherals Limited (RPTECH) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Rashi Peripherals Limited Q4 F526 earnings conference call hosted by Choice Equity Broking Private Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an option for you to ask questions after the presentation comes from. Should you need assistance during this conference call, please signal an operator by pressing star, then zero when you're touched on four. Please note that this conference is being recorded. I now hand the conference over to Mr. Kharam Khamdar from Choice Equity Broking. Thank you and over to you.

Thank you. Good morning, everyone. On behalf of the management team of Rashi Peripherals Limited, I welcome you to the Q4 and full year F526 earnings conference call. Joining us today to discuss the company's performance, we have from the management team, Mr. Kapad Bansari, Managing Director, Mr. Rajesh Goenka, CEO, and Mr. Himanshu Shah, Chief Financial Officer. Before we begin, we must remind you that the discussion on today's call may include certain forward-looking statements that may involve known and unknown risks, uncertainties, and other factors, and thus must be viewed in conjunction with the risks that the company faces. Future results, performance, or achievements may differ significantly from what is expressed and implied by such forward-looking statements. I now request Mr. Kapal Panshari to take us to the company's business outlook and financial highlights, after which we will open the floor for Q&A. Over to you, sir. Thank you.

Thank you, Choice Equity Broking, for hosting this call. On behalf of the entire Rashi Peripherals team, I want to thank our shareholders, analysts, partner, and well-wishers who have made this time to be with us this morning. To give you a backdrop of the industry, FI26 has been without exaggeration the most consequential year for Indian ICT distribution industry in over a decade. Three structural forces converge at the same time and they will continue to define our sector for the next three to four years. First, India crossed a generational PC milestone. According to IDC, India's traditional PC market shipped a record 15.9 million units in calendar year of 2025, growing at about 10.2% year-on-year, the strongest-ever year surpassing even the pandemic peaks of 2021 and 2022. Second, the AI PC inflection is real and accelerating. AI-enabled notebooks grew 129% year-on-year in calendar 2025. Gartner projects, AI PCs will cross 50% of all PC shipments globally in calendar year 2026, with India tracking that curve very closely. The Windows 10 end of support in October 2025 has triggered a multi-year refresh cycle. This is not a one-quarter tailwind, it is a structural multi-year upgrade super-cycle. And the third, component economics turned in distributors' favor. With memory DRAM, NAND GPU processors. I think firmness through FY26. Driven by AI data center demand absorbing global capacities. For a distributor with scale, deep OEM relationships, and inventory discipline, this environment rewards. Rashi has flagged that calendar year 2026 may see a temporary dip of 5-10% in PC shipments as the component cost works through the system. We read this not as a headwind, but as a normalizing year after a record run, and one where disciplined distributors with strong working capital and balance sheets will continue to take share. Where does Rashi stand in this industry? Is that this ITC industry marks? Almost about 1.5 lakh crore plus opportunity, with roughly 70% concentrated among top players. With India's PC penetration sits at just about 15-20%, there is enough room for runways to digitize as the penetration deepens into Tier 2, Tier 3, and Tier 4 markets. With our strategic initiatives, that will... Strategic initiative. With strong ICT distribution driven by high volume, anchored on reach, relationship, and executions, we are now positioned to look forward from here on. Our focus will be on three key pillars. One is to expand our high margin and high growth verticals. And the third is to continue to focus on the core engines of personal computing enterprise That will fuel the growth for this Rashi's transformation. That with the Indian ICT distribution market growing structurally, with our balance sheet, brand relationships, and the execution track record, Rashi is positioned to deliver not just continued above industry average growth, but a meaningful differential earning quality for over the next three to five years. I now hand over the call to Rajesh Goenka for his opening speech.

Good morning, Kapal. Good morning, everyone. Let me take you briefly through the... During the quarter, demand conditions remain healthy across key categories, supported by enterprise refresh demand, improving traction on AI-ready devices, and higher channel procurement as the price. We continued to maintain strong execution momentum and benefited from our strong distribution network of 55 city branch offices with 10,000-plus customers in 700-plus towns of India. We continue to be the leading value-added distributors for various AI solutions, including the recently launched NVIDIA DGX. It provides affordability to SMB and corporates and developers, which can help these customers to develop agentic AI solutions, inferencing, and run local LLMs in their office premise. We further strengthen our market presence through strategic partnerships and brand additions across multiple technology segments. Our partnership with Dell Technologies enhanced our commercial portfolio, especially on the server and the storage space, while our association with Teachman Technologies enabled us to expand into AI-powered classroom and digital learning solutions. In addition, we supported the India launch of Aura Health Rings, strengthening our presence in the premium health tech and lifestyle technology segment. We also continue to evaluate selective opportunities in emerging technology areas, including the semiconductor ecosystem, as a part of our long-term growth strategy. As part of our expansion strategy, we continue to add our infrastructure by adding three new branches, namely in Nanded, Baramati, and Sholapur in Maharashtra. Which now totals to 55 branch operations, by far the largest and unprecedented, further deepening our reach across the C and D class cities. We also conducted an 8-city AI boot camp engaging about 2,500 developers and 300 plus CXOs focused on AI infrastructure and real-world enterprise use cases, reflecting our commitment to accelerating AI-led adoption across industries. Finally, we remain committed to building a strong workplace culture and are proud to have been recognized as a great place to work for, for the fifth consecutive time. Thank you so much. Now I hand over to... Our CFO, Mr. Himanshu Shah, to take over the financial performance for the period under review.

Thank you, Rajesh, and good morning to everyone. I will now take you through the financial performance of the period under review. Our consolidated performance for the fourth quarter of financial year 2026, revenue from operations increased by 51% year-on-year to INR 4,489 crores. EBITDA increased by 41% year-on-year. With EBITDA margins at 2.95%, profit after tax was 87 crores, registering a growth of 65% year-on-year, with pet margins of 1.93%. For the financial year 2026, consolidated revenue from operations grew 15% year-on-year to INR 15,827 crores. EBITDA increased by 53% to 459 crores, with EBITDA margin expanding by 72 bips to 2.9%. Profit after tax rose 25% year on year to 282 crores with bad margins at 1.78%. In terms of segmental performance for the period under review, PCD constitutes around 58% of our business and LIT contributed 42%. Our cash flows for the period of the, as compared to the outflows in the earlier years, we generated a LB operating cash flow of INR 114 crores for the period. On the working capital front, we continued to maintain disciplined control across key parameters while supporting business growth and higher procurement activity during the year. Inventory days stood at 56 days, reflecting calibrated inventory management to ensure product availability across key categories. Debtors were at 46 days in line with higher business volumes and continued expansion across channels, while creditors days stood at 44 days. Reflecting balanced vendor management and procurement planning, consequently working capital days remained well managed at 58 days aligned with the operating requirements of the business. I am also glad to inform you that the ROC on an annualized basis has crossed 16% and for the quarter it was 19 plus percent. With this, I would like to hand it back to the moderator and open up for question and answer session. Thank you so much.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch and telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, We will wait for a moment while the question queue assembles. Participants, we will press star and 1 to ask a question. First question is from the line of Meloni Mehta from Monarch Capital. Please go ahead.

Hi, sir. Congratulations on great set of numbers. So, how much was the top-line growth driven by pricing versus volume? And moving ahead, after this exceptional growth, what could be the normalized growth that we see for FY27 onwards? And secondly, I just want to understand about this semiconductor and AI-led business. From when can it meaningfully alter the overall margins like over near term and how much can it benefit us?

Okay, Filoni, I think you have asked three questions. I will try to answer one by one. So, first, your question is about the impact of the price on our top line. So, as a clarification, the price increase predominantly has started from second half of the financial year. So, first half of the year, the price increase impact was minuscule. But at the same time, second half, there was a substantial impact. So H1, whatever growth we had was primarily on account of larger unit sales and more customers. H2, roughly on an average basis, if I see, the growth has been about 46-47% H2 to H2. I would account half of it or at least 20-22% growth because of the increase in the price. So that's the answer to your first question. Second question on the upcoming trajectory. So we always maintain that Rashi Perifels has continued to deliver 20% CAGR for last 20 years. So even if this year's overall performance of 15%, and if I exclude the one AI project that we did last year, then our growth is 31%. But then our average continues to be 20% CAGR. So we are very confident to maintain our trajectory of 20% CAGR in the coming year as well. And your third question was about semiconductor. I am happy to share with all of you that our semiconductor business, we have had 131% growth on a year-to-year basis. It is trending well. Although the base is small, but it is... We are having, as I said, 131% growth last year. But yes, considering the overall size of 15,800 crores, semiconductor meaningful impact to our top line and bottom line is few years away.

Okay, sir. Okay. And any, like, margin impact due to the semiconductor or currently it's not that significant? So, like, by when do we expect? Again, a few years from now?

Yeah, it is few years from now because our overall size of the company is 15,800 crores and semiconductor business is relatively newer baby. So, in few years, we'll have to wait. But we are on a very strong wicket with 131% growth.

Okay, thank you so much. That's clear.

Thank you. Participants, a kind request. Please limit yourself to two questions for a participant. Next question is from the line of Vinay Menon from Monarch Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. A couple of questions. One, you mentioned AITC growing. I just want to understand that, you know, what would you define to be an AITC because, you know, there are multiple operations in the market. So, are you talking about a PC which has an NPU or is it specifically, is there anything which you look at to categorize it as an AITC?

Absolutely. So a PC or a laptop which predominantly has an NPU is identified as an AI PC, but at the same time, high-end processors with GPUs also are identified as AI PCs, which can take AI workloads. To give you some idea, currently, around 25% of the PCs and Notebooks are available. The number of people that are sold in the country are AI PCs, but this is only accelerating, and next one to two years, we see multiple growth in this particular segment, which will also drive the average selling price of the notebook further up.

And just to talk on the overall PC refresh cycle, you know, we saw some kind of a, you know, delay because of, you know, these price hikes. So are you seeing that demand come in Q4 or do you think that will be more in H1 or H2 operation?

So this is a very good question, Vinay. When the price hike cycle started around Q3 and early Q4, a lot of large corporates, ISVs... We have extended their refresh cycle from three years to four years and four years to five years. But then the way the price increase is happening, now my observation is the trend is reversing. That now everyone is realizing that if I delay the purchase by one year, I may have to pay another 30% or 40% more price. So it is better to refresh it right now rather than waiting for one. And that is the reason, as Kapal mentioned, last year we had a record of 15.9 million pieces sold. So, that... Now it is getting reversed of the refresh cycle and looks like that refresh cycle will continue to be the it was normal as in previous years.

That helps. And one last thing on the semiconductor thing, how much we have understood that, you know, in semiconductor, the number of the working capital cycle is a little stretched and, you know, you see 100 plus odd days there. So, just want to understand that, you know, what would be our, you know, working capital there and is it stretching our working capital a bit and will it do that in maybe the few years once the scale is there?

While the working capital is higher, but at the same time, the gross margins are also substantially higher. So in terms of ROC, if we look at it, then it is higher than our regular business. So it is not a cause of worry. And at the same time, at this moment, we do not require too much of working capital because the size in the overall scheme of things is still very small.

Thank you. Participants, can you limit yourself to two questions per participant? Next question is from the line of Madhutati from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand what has led to, sir, for LIT segment, I've seen a decent growth this year. So, if you could help us understand what was the price growth year and what was the volume growth year and where do we see this segment going forward?

First of all, let me just clarify that the good thing for Rashi Peripherals particularly is that we have a very wide range of... So, we are not dependent on either on LIT or PAS because LIT contributes to 42% of our total gross revenue and PAS contributes to 58%. So, that means there is a very good balance. And I also am happy to share with you that in the LIT category, we have grown on a year-to-year basis at the rate of 24%. And in the PAS category, we have grown at 37%, which is obvious because of the higher H2PC demand and because of the higher ASPs.

Right, right.

And sir, as LIT is a better gross margin product, so if you could help us understand, can we expect a further, if this mix in business increases, can we expect a further gross margin improvement? And second question would be, sir, where are we on a software side of business, the software and hyperscaler side of business with so much? Data centers and new cloud companies coming out, so if you could help us understand on that.

Yeah, so LIT, we continue to grow almost 2x of the industry. LIT, one, Rashi Perif's market share is very high, and second, in that category, the growth is also not as P.S., but we continue to beat the market, and as I said, we continue to grow at 2x. Whereas, P.S., because of the PC refresh, because of the price going up, the natural growth opportunity is there. So, we will continue to have growth momentum in both the categories, but to me, it does not appear that LIT will be able to take over or come closer to. So, that's one. And second question was on your hyperscalers. So, if you remember, last year, that was 202425. We had the privilege of executing India's first and the largest AI data center very successfully. Last year, we have not done consciously meaningful business in that segment because we already had a hyper growth of 37% if I just remove that project order. But this year, we plan to have growth both in regular business plus in project business, and we are in the race to win some of the AI data center projects as we speak.

And sir, do we see our inventory days coming down with Make in India initiative of this hardware component that is moving to India a lot faster, similar to seen in the mobile ecosystem? Do we see our inventory days coming down maybe over the next two to three years because of this shift?

Yeah, so theoretically, there should be some impact of inventory days correction as the Make in India grows. But the real fact right now is that Make in India is still very limited. And second, we have, excluding the project, we have had a 31% growth on a YOY basis. So when you are having 30% growth in regular business, then you need to continuously buy inventory and keep inventory. So, these two factors right now are not enabling us to reduce the inventory days, but going forward, yes, there is a good chance in scope of improving the inventory days.

Thank you. Madhura, I will request you to come back for a follow-up question. Next question is from the line of Hitesh Koyal from Origin Capital. Please go ahead.

So, thanks for taking my question, and congrats to the management for a very good set of numbers. Sir, on Dell part, can you give us numbers? What is the part of revenue with Dell in absolute revenue this quarter and last quarter, just to see the trajectory?

It is, I am not at the privilege to give the specific numbers brand-wise, because even as per our agreement, we cannot. But only thing I can indicate to you that last year we started midway and we have tasted waters. Good thing is that we are doing their entire products and solution groups right from their PCs to laptops to servers, storage, monitors, everything. And to give you an indication, it should be a double-digit share in our overall top line. In fourth quarter, you think? No, I'm talking on the entire year.

Okay, because the trajectory, I think it came in second quarter only last year, right?

Correct, yeah. Yeah, so trajectory is... So while it is at low single-digit, but on a YOY basis, next financial year, we think that it should be close to double-digit. Okay.

And sir, you also alluded to margin expansion in FI 27. Can you explain, you know, I didn't get this, how will you increase the margin in this hyperinflation environment?

So can you just give us some sense? Yeah, so there are two points to this. The margin expansion business that we are trying to talk about is how do we create a better value chain and value proposition for the organization. Typically, when you expand into semiconductors, enterprise businesses, these businesses are not of a just supply chain, but they are solution-driven economics. So, when you provide solutions, whether it is related to services, whether it is related to design-led sales strategy, they always give you a potential to earn higher margins, and that expansion will drive our higher margin portfolios.

So, this is more of a strategy for 2-3 years, not like a person. Absolutely. Yeah. Okay. Okay. Thank you. And all the best. Thanks.

Thank you. Next question is from the line of Tushar Khandelwar from Nexus Equity. Please, go ahead. Tushar, there's a bit of background noise from your line. Can you move to a different location, please?

Sure, sure, sure. So my question is from like next year and year forward, what would be the split between lifestyle and enterprise segments? And if you can give me the volume numbers, volume and price growth, what would be the share of volume growth and price growth?

Yeah, so as I explained already, our last year lifestyle growth, LIT growth is 24% and PES growth is 37%. So I think similar ratio will continue in the next year also. Again, because in LIT, we have a higher market share. That is one. As far as the price increase is concerned, LIT, there is no major price increases happening. It is routine price increase only. The price increase... It is happening and is expected to further increase in the PAS category only, and that increase now onwards it is expected on an average should be another 20%.

Thank you, thank you. Thank you. Next question is from the line of Aegis from Unify Mutual Fund. Please, go ahead.

Yeah, hi, team. Congratulations on a very strong execution. Really speaks about the, you know, how the organization is set up and is delivering at scale and size. Two questions from my side. First is, team, could you call out that, you know, from whatever is available publicly, we're hearing about a lot of these incremental data center opportunities that is coming in the country. Can you just articulate how we should understand FY27 and FY28 and your ability to participate in deals that, you know, like you have done with the first data center deal, how do you intend to participate in them? Because we understand that, you know, there is a certain capital requirement for such deals, and they are definitely accretive. But given the capital requirement of these deals, And your learnings from the first deal, how should we really understand how RPTech can participate in that? Thanks.

So, Aegis, I think, again, this is a very relevant question in this prevailing time. So, before I answer your point, I just want to take this opportunity to share with all our investor community that Rashi Perifers was the first company to execute. A 2000 crore 512 server 4000 GPU AI data center at Yota very successfully, which included installation as well. We are again the only company distribution company in India which has this kind of expertise of doing basic pre-design. Logistics. This is the first point that I want to give you confidence to you ages. There are multiple AI-related data center and non-AI data center projects are going on in the country, primarily because of the data sovereignty, primarily because there is a major push from the PMO office. We are at various stages of discussions. The size. I am not very sure whether they can finally get finalized or no. Rashi will pick up proportionate to our capacity of this amongst these opportunities. Obviously not run after everything because they are one capital intensive and second the margins are also lower on this front. But then we are there in this in the forefront.

Understood. So, Radhisi, I hear you, but could you give me some incremental color on your thought process? Because participating in these deals is relevant because of your ability to stitch things together, right? So, it gives you a certain visibility and a presence. And these are fast-moving items, and they're growing quickly. So, but... Again, like you mentioned, it's capital consuming with slightly lower margins. So, you know, how would you make that trade-off between participating in a deal or, you know, continuing to use that capital in your regular business per se? So how do you make these decisions? That's what I'm trying to just get a sense of.

Yes, so while we, first of all, do not compromise on our regular run-right business, where we continue to aspire to have 15 to 20% growth. And then over and above, I think we currently, post-IPO, we have the capacity to pick up these kind of projects subject to ROIs. So if there is an opportunity where we have a decent ROI, then we can pick up these projects as an add-on to this. Our regular run rate growth of 20% wire.

And could you just call out that, I mean, broadly this year from the 15,800 crores of revenue, what's been the cut between, you know, the large deals, including maybe the spillover of the data center, the enterprise segment, and the core distribution business? Could you just give some revenue cuts or color around them? And second, could you just, lastly, could you speak about how the enterprise side of the segment is doing for you?

Yeah, so last year, we did not do any AI large deals. They were all small deals to the tune of 5, 10, 15 crores only. So our 15% growth is without any large deals. And therefore, I said if I remove the last to last year Yota deal, then we have a growth of 31%. And to answer your question on the enterprise piece, we are having a very high. Growth on the enterprise piece, which is non-AI, particularly driven by NVIDIA solutions. One example I shared during my speech about the NVIDIA, DGX, Spark, and so on and so forth. So there, of course, we are having a high growth and the market also is growing exponentially. And third, now the price is also very strong uptrend. All three are in our favor.

Mr. Team, thanks and all the best.

Thank you. I request all the participants, kindly limit yourself to two questions per participant. Next question is from the line of Samukh from Corman Capital. Please go ahead. Sumokh, may I request you to align and proceed with your questions.

Hi, team. Can you hear me? Yeah, thanks for the opportunity. My question is on the partnership with S.P. Pinserv. So, how does this impact your working capital days going forward, and what percentage of your revenue would be coming under this working capital, sorry, supply chain deal, and who will be bearing the credit risk on this?

So, SP FinServ is a channel finance program which we have onboarded, and it is a normal channel finance program without any recourse to us. It is basically to enable the channel partner fraternity to have capacities to buy more without affecting the credit risk.

Okay, so this should actually bring down your working capital, Jayce, because my guess is this is borne by you currently.

No, the cost, if we draw the money early, then only it is borne by us, which we normally don't do. And it is, the credit cost or the funding cost is borne by a general partner. So it has no recourse to us, no impact on us. And no cost to us.

And on the semi-conductor business, sir, who are your predominant customers so far on this line?

All the large manufacturers in the automobile space, robotic space, IoT space, they are all our customers.

So any exposure to hyperscalers, yes?

A hyperscaler is more not on the embedded side, semiconductor side, but that is more on the server storage side.

Yeah, that's it from my side. Thank you. Thank you.

Thank you. Next question is from the line of Neshita from Sapphire Capital Partners. Please go ahead.

So, am I audible? I just had a question on your project business. So, you mentioned that if we would have excluded FI25's large deal that we did in project, so our growth would have been 31%. So, how much revenue did we did in FI26 from the project business, if you can say, and how is that going to grow going forward? How much revenue do we see from project in FI27?

So just a clarification, you have misunderstood. When I said 131%, that is only in our semiconductor business. As far as project business is concerned, in 24-25, we did 2,000 crores of project business. However, consciously in 25-26, we did not do any substantial project business. But in 26-27...

And on margin front, do we get better margins in project?

Definitely no, and that is why I said that subject to ROI and feasibility, we will try to win some project orders. That's the last word I added.

Thank you. Next question, sorry, next follow-up question is from the Lion of Madhurati from Counter Cyclical. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand on the hyperscaler business. So, are there any plans to sell that server storage that what Reddington does? Because it seems that that is a very big business and these hyperscalers generally don't take a lot of distributors. So, two or three distributors at Maxxer. So, is there any plan to get into that business or how should I look at that?

So, as I said, Madhur, earlier that 24-25, we did the largest order ourselves, and Rashi Perifels is uniquely placed and has the expertise of doing pre-sales, sales, execution, installation, and post-installation support also. So, therefore, we have the core strength to cater to these hyperscalers. But at the same time, yes, in the year 25-26, we have not picked up any substantial order because non-project our business was already growing at 31% on a YOY basis. And especially if you see Q3 and Q4, our business grew by 42% and 51% namely. So our focus, attention, our capital was more deployed there. I want to re-clarify that we are very much capable, we have the experience to do this kind of business, and we are looking for opportunities in the coming year.

Right. And, sir, you also created one semiconductor subsidy, so if you could help us with plans for that.

So, the semiconductor subsidiary is created to give higher focus. So, we created this subsidiary to transition from within the group company into this subsidiary, so that partnerships, alliances, team structures, and even customer acquisitions can be accelerated.

Okay, got it. Sir, that is from mine. Thank you so much and all the rest.

Thank you. Next follow-up question is from the line of Vinay Menon from Munaf Capital. Please, go ahead.

Hi, sir. Thanks for the opportunity. Just a couple of things. One is this AI bootcamp which you have mentioned, if you could give some color on that and, you know, what could it add to our business, that would be helpful.

Yeah, so basically these AI boot camps we do along with our vendor suppliers, all the big AI vendor suppliers. I cannot just name in this forum. We invite developers, we invite CXOs, we give them use case live experiences, how they can use various products and solutions that we have. To develop agentic AI solutions, how they can do rendering, all these training programs we do. And this indirectly then gets into a BOQ or inquiry state, which eventually gets into order. But it's more of seeding and training program, which has a very long lead cycle, usually six months to.

One thing for Himanshu, sir, what could be the time going ahead because of all these disruptions and shipments? Will we see any impact on that?

So the lead time and the delivery times have not affected too much because of the so-called disruption of shipments because our shipments are not routed through the affected routes. Secondly, working capital, there's a miniscule shift because of the change in debtors days to four days. Creditors and inventory days set off each other in terms of incremental working capital.

Okay. Okay, so we can expect this rate for FY27 as well or any improvement expected?

Yeah, we can expect around same range.

Thank you. Next question is from the line of Deepak Lalwani from Unified Capital. Please go ahead.

Hello, sir. Thank you for the opportunity. Sir, I had a question on the future volume growth of the company. So today we are benefiting from both price and volume. You said that people are stocking up in the fear of further price hikes. So, I want to understand how sustainable, what should be the sustainable volume growth for the company in FI27, and the drivers for this volume growth, if you can explain how the secondary demand for your products are looking like, both in LIT and PES, if you can give a macro picture of how the demand is really shaping up on ground, that will really help.

Thanks, Deepak. Let me answer your query for the first part. For the secondary sales, I'll let Rajesh to answer. Please, we see that currently the industry is an upswing and super cycle of the adoption, price rise, and availability. When these things are happening, there is a natural tendency to prepone the binds. Build up inventory to sustain the price hikes so that there is an immediate and near-term advantage that we can take from these cycles. Applications growing, the demand for refresh towards AI PCs will also accelerate as the acceleration for the applications continues to grow. And in this scenario, we are also trying to increase the working capital of inventories so that those opportunities can be expanded. While, from a demand perspective, we do not see. We don't see any softness at this point in time, while the predictions, obviously, the affordability will come into picture. But we do not see any demand slowing down in the current economics and the scheme of things that we operate upon. You should not only just go by what we are saying. In fact, you should look at companies like Intel, AMD, SK Hynix, Samsung, Micron, Sandisk of the world, Western Digital. Please study these companies, and you will realize the demand cycle is only growing, and there is no anticipation of softening of the prices as well. This has never happened in the history of any economic cycle or any distribution or IT hardware industry. And therefore, we say that this is a super cycle and the most opportune time for the industry. At any given point in time, this softness, we are here to stay, and we will be the first person to come and tell you about what the industry cycle looks like. When it comes to the secondary PC cycle and the demand at the tier 2 level, I'll let Rajesh to answer that question.

So, Deepak, I just want to clarify once again that which I have already said and I repeat that Rashi Periflis' dependency on one product, one brand is minuscule. So, LIT business, 42% of our business comes from LIT. That business continues as in the past. There is no major variation in the demand or there is no major impact even on the pricing. There is a regular. So this 42% of our business is unaffected. The remaining 58% business, which is P.S., there is a major price increase. Impact that is coming in, and there could be a potential shortage in supply also, which should come. But our estimate says, and IDC also says that on an entire year basis, the unit-wise, the market size could degrow by 5 to 10 percent. So, even if I assume that the market size of this 58% of the Rashi's revenue degrows by 10%, but the price itself will grow by about 20-25%. So, net we will continue to have 10-15% growth on an as-is-where basis without any doing any change. But as we continue our momentum with our penetration in newer geography, newer customers. And increasing our market share, we will be able to maintain our momentum, even in this PES category. And coming to your point on secondary demand of consumer and commercial, we think that commercial demand will continue to be strong because of our overall economic situation of the country. But in the consumer, there could be a softness in the H2 of this financial year because of the affordability. Today, a laptop a year back was easily available at 30-35,000 rupees. Today, you can't even get a laptop at 50,000 rupees. But another 15-20% price rise in six months could make this laptop to 70,000 rupees. Thank you. There could be some software. But that also can be offset. So I am very optimistic. We are already discussing with various vendors and suppliers to have longer EMI schemes. If the current EMI schemes are 6 months or 12 months, maybe we can have a 24 months and 36 months EMI interest-free schemes, which... It will happen in H2, but otherwise, there is nothing much to worry about.

Thank you. The next question is from the line of Dheeraj Kumar Reddy. From AlphaXQR, please go ahead.

Sir, thanks. Thanks for the opportunity. There are a couple of questions from my side. What is the aspiration in terms of fat margins? I mean, I know already we have really expanded quite well in the last one, two years, but because we are in a super cycle, like you mentioned, in the next two, three years, like how do you see the fat margins expanding and what is the aspiration of the management?

So, distribution industry has got very finely defined margins and we continue to operate in that. So, around the range of 1.5 to 1.75 is the range applicable to this industry. Unless the product mix or the customer mix changes, you know, to a greater extent, we can expect some shift. Otherwise, this is the range which we generally advise.

And I would just quickly like to add, that if this is a super cycle, then we think that this super cycle will continue for another year or two. And we are very bullish and optimistic on this.

Got it. Sir, also on the data center deals which you just mentioned, which the company will start to pick up. What is a typical margin structure like, if you can reiterate, and how do you see what is the kind of potential probably in the next one to two years, or probably in the next two to three years, if you want to take a medium term view, like what is the extent of revenues Rashi can probably take up?

So margins, I cannot say this because it is at the end of the day, it is an ROI. What are the commercial terms? What is the margin? What is the delivery terms? And it varies from project to project. But all I can share from India perspective that as we speak currently, there are funnels doing more than 20,000 crores. Funnels are there. Funnels does not always mean that they will get converted into orders, and that does not always mean that everything will come to Rashi peripherals, but that's the funnel that is building up, and this funnel will only be increasing in the next two years further as AI adoption increases more.

Thank you. Next question is from the man of Vaibhav Gupta from Bowhead Investment Advisors. Please go ahead.

Yeah. Hi, sir. Thanks for the opportunity and congrats on the great set of numbers. Sir, I just wanted to understand with the current price hike environment, what is the impact on margins? Is there any negative impact or are they more or less intact?

Margins are intact with the price rise, and in fact, the overall profiling has little bit bettered only, and which is evidence of the numbers delivered and declared. As far as expectations from price rise on the margin front, as I mentioned, the distribution industry has got very finely defined margins, and we continue to improvise with the operating leverages and volumes which we attain in our growth path.

So, what Himanshu is trying to say is that Rashi Perifers earns as a percentage of margin. So, when the price size happens, on a percentage basis, absolute value also grows, while on the selling side, the value does not grow to that extent. Our fixed costs and our people and operating costs remain the same. So, we have an operating leverage advantage.

Understood. And when we see gross margins of Q425 versus Q426, how should we see it? Like there is a slight deterioration in margins, gross margins.

No, it's not deterioration. We have, you know, some aging, slow-moving inventory, I would say. We have taken additional charge on that and brought down the value of that slow-moving inventory as a prudent accounting practices.

Understood. Thank you. Next question is from the line of Karan Khandar from Choice Equity Broking. Please go ahead.

Hello, sir. Sir, I understand we have a very large distribution network, and I believe it's one of the largest ones in this space. So could you help me understand how the distribution network is our business, and what kind of benefits, and do we extend to our channel partners and branch managers?

Can we take this question offline? This is overall business cycle discussion, which needs 15 minutes. So, if you don't mind, can we take it offline?

Sure, sure. And I

would also suggest you to go through our investor presentation. There is a dedicated slide on our distribution structure of GT, MT, LFR and online.

Thank you very much. As there are no further questions, I'll now have the conference over the management for closing comments.

Yeah. Thank you, Karan. Thank you for your continued trust. To our 82 brand partners, thank you for choosing Rashi Preference as a distribution partner in India. To our 10,000 plus customers, of India. You are why this business exists. And to our family of 1500 plus colleagues, every number that we are reporting today is a result of your work. Thank you so much and looking forward to FY2627 with all of you.

On behalf of Choice Equally Broken Privately Method that concludes this conference, thank you for joining us and you may now disconnect your lines. Thank you.