Rashi Peripherals Limited (RPTECH) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Rashi Peripherals Ltd. Q1 F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Mehran from Monarch Capital. Thank you. And over to you, Mr. Mehran.

Thank you. Good morning, everyone. Today on the call, we have Mr. Kapal Bansari, Managing Director and Promoter of the company, Mr. Rajesh Goenka, CEO, and Mr. Himanshusha, CFO of the company. I hand over the call to you, sir. Thank you.

Thank you, Vinay. Good morning, everyone, and a warm welcome to our earnings call for the first quarter of fiscal year 2026-27. Thank you for your time and your continued interest in Rashipel Fills Ltd. I will be covering four things today. The industry background, our performance for the quarter, the progress on our strategies. We are in one of the most consequences. Three forces are converging at once. First, the multi-year PC refresh cycle. The move away from Windows 10 has triggered a sustained hardware replacement wave across enterprise and commercial users. A multi-year cycle, not a one-quarter bump with real room still to run. The second. is the AI PC inflation. AI-capable devices are rising share of every shipment and carry higher average selling price as well. As AI spreads to the edge devices, the incentive to refresh towards these machines is only accelerating. And the third, the defining feature of this year, a fundamental shift in component economics. AI data center demand has relocated. The world's memory capacity towards high bandwidth memory, creating a sustained shortage of conventional DRAM and NAND flash along with firm rising prices. Independent forecasts expected to persist through 2028 as well. What does this mean in practice? The unit shipments could be under some pressure, but the value of the market is rising. Because pricing is firm and moving up. The advantage flows decisively to players with scale, deep OEM relationship, disciplined inventory, and balance sheet strength to secure the supply. The players would take share when others cannot get product. That is Rashi. And beneath the cycle sits a far larger structural story. The Indian ITC distribution opportunity is over 1.5 lakh crore with PPC penetrations still only in the mid-teens. As digitization deepens into Tier 2, 3 and 4 India, the runway is enormous. This is a multi-year opportunity and we have built this company. Now let me turn how that translates into our numbers. This was on multi measures our strongest quarter yet. Thank you. At 69.5% to 105 growth with diluted EPS of 15.25. But growth isn't alone the measure of a well-run business. So we would like you to note that we delivered the highest annualized ROC and ROE since our listing at approximately 19.5 and 19.8%. As we are facing top line in a good cycle, we are converting it into a profitable, capital-efficient growth. That rests on disciplined working capital, staying tight at around 56 days, and our operating leverage is visible. Because as prices rise, our absolute margin grows, while our cost base stays broadly stable. Now the part that I am most energized to share. Over several quarters, we have laid out a vision built on three strategic pillars. This quarter, we moved decisively from intent to execution on everyone. Our pillar number one. This is our core engine of personal computing, enterprise, lifestyle, and component economics. All cylinders, the refresh cycle, robust enterprise demand, and firm pricing, all in our favor, visible in our near 62% top-line growth. We are deepening it further by adding solutions to strengthen our AI and high-performance computing portfolio and open two new branches in Udaipur and Dhule, extending our reach into the C and D-class cities where penetration is the lowest. It remains the bedrock on which everything else is built. It is our ambition to evolve from a pure distributor into an integrated solution partner, and this quarter we acted, announcing a strategic acquisition of a majority stake in VDA Info Solutions, a well-established Pan India system integrator with a strong enterprise clientele. What makes it compelling is the shape of the business, the capabilities of service and renewal that it involves. The services that it provides are enterprise implementing, implementation, consulting, managed services, cybersecurity, cloud, and data protection. The nature of revenue streams that are sticky and annuity-like with long clientele tenures. This is forward integration in action. It moves us up the value chain and shifts the quality and durability of our earnings. We've structured it so that the founders retain a meaningful state through a staged mechanism protecting alignment and continuity. Our pillar number three, which is a high growth vertical with semiconductor at its center. This is our single most important long-term value leveler. And this quarter, we took a defining step by announcing a joint venture with ReStar Corporation. It is a leading Japanese semiconductor and technology company, structured at 74% Rashi and 26% Resta, focused on advanced image sensing solutions for industrial and automotive applications. It pairs ReStar Semiconductor Technology, Supplier Relationships, and Application Know-How with our Pan-India Distribution, Reach, and Exchange. It also includes direct skill transfer from Japanese design experts who will train our engineers, backing our 50-plus local engineering hires over the next two years. In semiconductor back in 2021, it's beginning to take shape. As India moves towards a $150 billion semiconductor market by 2030, this is a business that will structurally become a growing source of a future ROC and ROEs. I'd like to summarize that to bring it together a record quarter of growth, a record quarter on returns, and a decisive execution on all three strategic pillars. Our direction is clear and consistent. Scale the core and build share. Expand margins by integrating up the value chain. And build tomorrow's high growth business today leading with semiconductors. Step by step, we are moving Rashi from a distributor to a trusted, integrated solution partner that enables technology adoption in India. Pricing is elevated and there may be pockets of consumer affordability pressures in the second half. Verticals, our disciplined balance sheet, and channel financing tool gives us real resilience to our share gains, and richer mix will carry us through whenever the cycle normalizes. We'll always give you an honest read of the cycle in good times and challenging ones alike. With the industry in a genuine super cycle, stronger balance sheet, brand relationship, and execution track record. We are confident of delivering not just continued above industry growth, but a meaningful differentiated quality of earnings over the coming years. With that, I hand over to our CFO Himanshu Shah for detailed financials, after which we, along with our CEO Rajesh Gohinka, will be happy to take your question.

Thank you, Kapal, and good morning, everyone. It is my privilege to present our financial results for the quarter ended June 2026. And I want to begin by stating this plainly. We have just delivered the strongest quarter in the history of this company. Not incrementally stronger, meaningfully decisive, stronger across every matrix that matters to you. On a consolidated basis, revenue from operations stood at Rs. 5,102 crores, up 62% rounded off year-on-year. EBITDA grew 55% to INR-173 crores and EBITDA margins at 3.38%. Profit after tax surged 69% to INR-105 crores, delivering a pat margin of 2.05%. Profit before tax grew 73% to INR 139 crores with PBT margins expanding to 2.72%. On a standalone basis, the performance is equally compelling. Revenue came in at INR 4832 crores, up 58% year-on-year. EBITDA grew 50% to INR 164 crores with margins of 3.38%. PET increased 65% to Rs. 97 crores at a margin of 2.01%. And PBT grew 65% to NR130 crores at a 2.69% margin. These are not numbers we stumbled into. They are the outcome of a strategy that is working, a team that is executing, and a market that is responding. And this quarter marks new all-time highs on top-line EBITDA, PAT, and annualized ROCE, all four simultaneously. What makes this quarter especially noteworthy is not just the scale of growth, it is the quality of growth. We grew the top-line aggressively while simultaneously sharpening our balance sheet discipline. Inventory days tightened to 55 days, debtors' days stood at 41, creditors' days stood at 40, and overall working capital days improved year-on-year to 56 days. For a business growing at this pace, the kind of working capital efficiency is a real differentiator. And it reflects the maturity of our operations. To summarize, on a consolidated basis, INR 5,102 crores in revenue, INR 173 crores in EBITDA, and INR 105 crores in PET. On a standalone basis, 4,832 crores in revenue, INR 164 crores in EBITDA, and INR 197 crores in PET. All-time highs across every key metric. This is not a peak, it is a foundation. With that, I am delighted to hand it back to the moderator and open the floor for your questions.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone 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. The first question comes from the line of Amit Khaitan with Lebanon Capital. Please go ahead.

Hi. Good morning. Thanks for taking my question. Congratulations on a great quarter. So my first question is on the demand side, right? When we look at some of the global distributors, you know, who are listed abroad, all of them are reporting strong numbers. However, their growth in Asia-Pacific is particularly strong, and they haven't raised the overall sort of guidance. So I'm just trying to understand, is there something that we are seeing different in India in terms of demand tailwinds, and how sort of sustainable is that?

So, Amit, to give you perspective, third-party reports indicate that there will be a reduction of about, I think my voice is echoing.

Yeah. Speaker, just give me a moment.

Just give me a moment.

Yep, go ahead.

Yeah, so I'll repeat my answer, Mr. Amit Ketan. So all third-party reports indicate that there will be a reduction in the total size of the market by about 10% unit-wise. However, prices continue to rise due to the shortage of particularly memory, hard drive, and... So, the price trend continues to be on the uptrend. As a result of which you can see that price increase is offsetting the quantity drop that is happening. So, to answer your question, what is going to be the trend in near future, at least in Q2, this trend seems to be continuing, the price uptrend continues. We are expecting similar trend to continue in the entire this financial year, although the trajectory there may be a little bit slowdown comparatively.

Question is more relating to why is the demand so much higher in India relative to the rest of the world? So the factors that you outline are sort of common globally, right? But why is demand in India so much higher than, say, the West?

Yeah, so I think the first and foremost in India, because of the overall economic situation, which is extremely good. Second, high focus on digitization. Third, very high focus on education. These are the three fundamental reasons for higher PC demand and then related accessories and then related data centers. Which is triggering the growth. So if you see our GDP and economic situation also is immune, almost immune to the global shocks that are happening. So therefore, we have been continuing and we will continue to reap the benefits of growing demand on the overall perspective along with consistent price increase as well.

Could you give some sense of the split between, you know, the consumer segment versus, say, the commercial and the enterprise segment? Just a rough split of how much is the, in terms of end customer, where does the products go?

So, Rashi Peripherals is a B2B company, so we do not sell directly to end customers. We always sell through partners. So, we have a general sense of consumer versus commercial. So, my general sense would be that about 30-35% of the business is consumer-centric, balance 60-65% is commercial, which is split between SMB and enterprise. But I must also add that consumer, there is... Still slow down because of the affordability. The laptop prices, for example, have already become 2x as compared to the last year. But for commercial applications, they don't have an option. So they continue to buy. In fact, they are preponing the buying to mitigate the expected price gains. There are only some exceptions where some large companies have increased their refresh cycle from three years to four years or four years to five years, but that impact is not very much. So we are seeing a significant growth on the commercial segment.

Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Bhavin Cheda with In-Arm Holdings. Please go ahead.

Good morning, team, and congratulations to the entire team for record numbers, and also along with the record numbers, maintaining a very strong balance sheet. So that was a very positive outcome of despite strong numbers, the balance sheet has been under control. A couple of questions. First, on the growth part, your result shows that there has been sharp increase in inventory, which also indicates that we are heading for record quarter two or quarter three also, because obviously we will stock goods when there is a strong demand. My question was, how much of this quarter the overall growth momentum is captured in 60-62% growth? How much is the volume price growth? As you mentioned in your opening comments, the prices of memory, hardware, CPS are still increasing. So how much of the price growth got captured in this quarter, and how much is going to get captured in quarter two?

So, Bhavan Bhai, I will try to answer point to point. So, first and foremost, if I look at the break-up of our 60% growth on April, May, June versus April, May, June, broadly speaking, 30-35% has come from the price increase, 5-10% has come because of addition of new products and new brands. And the balance 20-25% has come by increasing the quantity. Here, in the commercial segment, the market size also marginally has grown, so we have taken that advantage. But I must also add that because of our widest reach across 57 towns of India and because of our widest portfolio, we continue to gain market share. So 10% business is accounted for improved market share as well. So this was the past quarter. In the expected quarter, the demand, I think, will continue the same way without too much of... Hiccups. July, August, September traditionally has been a very high quarter. In the previous calls, I have always mentioned that there is a fight between JAS and JFM quarters, which should be highest. Sometimes July, August, September is highest. Sometimes JFM is highest. This time, consumer sentiments are pretty high, and the feedback that we get, especially from LFR and online, is that demand should be good. And the fear of further price increase also will trigger the buying. So we are very optimistic that similar trend will continue in July, August, September also. The only big gap could be that price increase now is not going to be as fast as the previous quarter. So that delta will come. But otherwise, we are on a dream run for the coming quarter as well.

Yeah. That's great to hear. And my second and last question, obviously, as the couple also said, we are pivoting to integrated technology partner. And recently, we have done a couple of acquisitions, JVs and all that. So, can you give some insights on that, how revenue contributions from these new ventures will flow in, whether second half currently or next year, how we should look at this new pivot over the next two to three years?

So, I'll answer that question, Bhavan. I think the way to look at it is that it's too early to comment. The acquisition that we have done, approximately 5% of our revenue portfolio will come from these integrated services and value-added solutions. To give you a precise outlook on how should we look at it, I think we will still have to wait for another quarter. In Q2, we will have our numbers much more presentable and update on the direction that these acquisitions are I'm going to take. Similarly, on the semiconductor side, again, this is a JV that we've formed as a step-down subsidiary of Rashi Peripers Limited, and that step-down subsidiary will form a JV with the Japanese Restart Corporation. The moment we do that, the numbers are also going to come back reporting with the quarter two financials. So you'll have a far better picture. The only point I can say is, semiconductor is growing almost double digits sometimes in X's also, and this will continue to accelerate. To give you a perspective, our semiconductor revenue has already crossed 70% of the entire year's revenue that we did last year. So, there is significant momentum on that side as well.

Great. Thank you, and best of luck.

Thank you. A reminder to all the participants, I do my best star and want to ask a question. Next question comes from the line of Hippesh Goyal with Oregon Capital. Please come back.

Thanks for taking my questions. First of all, congratulations on a very good set of results and what was encouraging also that working capital days actually come down despite a very strong quarter. Sir, wanted to get a sense on the VDA bit also, if you can give us some sense, how was the quarter, how you see the outlook for next year, and what are the plans for next two, three years, and get some sense of it.

Yeah, so on the VDA, it is a very strategic acquisition of 67% stake in the… First year, our core objective is to improve our capabilities in terms of design, pre-sales, post-sales, and managed services. We are not looking at this moment on the top line, but just to give you, previous financial year, they did 850 crores. In this current financial year, obviously, there will be a substantial growth plan. But VDA will bring value creation to all our stakeholders in next two to three years' time, and we are working in that direction at this moment.

And, sir, my second question would be on the supply constraints, right? So, we are hearing from the market that there are supply constraints in terms of, you know, the BCs because of pricing and also global AI demand. There is supply constraint on the, you know, chips and all which is coming, which is, which is, do you think that can also impact volumes in the second half?

Yeah, so there is a potential risk, yes, but at the same time... Now, Rashi Perifels is in the industry for more than 30 years. We have good relationship and business agreements with all the global companies including NVIDIA, Intel, AMD, all these companies. So, so far we have been able to get good allocation and coupled with the price increase, we are at an advantageous situation. So, I do not see too much of a challenge, But yes, this is an orange alert for us. We track it on a weekly basis.

And sir, for my final question, can you give the revenue from the Dell business in this quarter?

So roughly about 5% business has come from the new Dell commercial business in the past quarter, previous quarter.

And can you remind me what was your target for FF27 in Dell?

We are above the target as far as numbers are concerned. That's why I can say that.

Okay, sir. All the best, sir. Thank you.

Thank you. Next question comes from the line of Ayush Chaburiya with Shrawa's Capital. Please go.

Yeah. Hi. Congrats on a good set of numbers. If you could just give us some sense on how the inventory is on your channel partners, it would be great. Just trying to understand how things are going on that side of the business as well.

Okay. So, Aakim Bhavan Bhai also mentioned that we have high inventory, which also means that July, August, September sales will be good, which is exactly the right. But I just want to also clarify that our current inventory at our level also is actually not high. Basically, we take days of inventory vis-a-vis the sales. So, when I compare to the sales versus the inventory, actually the days of inventory are marginally going down. As far as T2 partners and our customers' inventory are concerned, definitely there is a built-up in inventory across all the channels because all our T2 partners are trying to make double-digit margin, so they are selling slowly. But it is not a concern because if they decide not to earn extra margin and then sell, probably they can sell it very easily. So to give a fair opportunity, because in IT industry, earning extra margin, especially at T2 level, is not very common. This is an opportunity. So we think that as long as they are able to circulate the money properly and on time, let them earn money. So, yes, inventory is high, but it is not a very big concern, because there is a good demand currently, and in the near future also, demand will continue.

Understood. Understood. Also, if you could just give us your thoughts on, let's say, the commercial side of the business, right? What do you think about refurbished as an opportunity? I know you guys definitely not going to that, but I'm just trying to understand, is there a threat in terms of prices going up because refurbished just costs one third of the actual price? So do you think near term, do you see any kind of threat from that end as well because commercial would be readily available to shift to that kind of thing? Just your thoughts on this.

So, overall PC TAM in India is about 15 to 16 million PCs per year. So, and refurbished, some people say it is half a million, some people say one million. So, even I assume that the PC time is about one million, it is not very significant. I will not say insignificant, it is not very significant to worry about. And second, to get refurbished products also within India is not easy. So, I know a lot of refurbished players are there who are trying to source product, but availability is also not easy because now the refresh cycle of most enterprise has increased from 3 to 4 or 4 to 5. So, while, yes, there definitely will be upswing on the refurbished PC, but it will not make too much of an impact on the larger scheme of things. So, we are not too much worried about it.

Understood. And one last question, if you will just split the top line growth between volume and value, it would be great.

So, in terms of unit-wise, we have grown by about 20%. Overall, actually, when the reported numbers, you see there is a dip in the numbers, but that is only because there is a memory brand called Sandisk, where we have a major unit dip. But if I keep that inside, the unit growth is 20%, and balance growth is coming from the ASP increase. So that I mentioned in my first answer that we increase, improve our market share by also by about 10%.

All right. Thank you so much. All the best.

Thank you. Next question comes from the line of Nishita Shankalasha, Sapphire Capital. Please go ahead.

Hello. Am I audible? Yes, so I just wanted some clarification. You mentioned that our Semicon revenue has already crossed 70% of the entire revenue that we did for FY26. So, like, does that mean that in Semicon segment, we have a revenue of around 11,000 crores?

So, let me please clarify that it has the revenue of semiconductor portfolio. FY26 in first quarter has grown by 70%. It is not that our overall revenue, 70% is semi-con now.

Okay, okay, understood. And you mentioned that Q2 is generally very good for us. So can we expect a similar growth, like 60% growth or better growth in Q2 year on year?

Yeah, so as I said, I have already indicated that Q1, we have grown by 60%. Q2 also similar trend will be there. The only correction will happen on the speed of the price increase. Price increase speed should be half. So that much detrimental growth could happen. But we are on a very strong footing as far as Q2 is concerned.

Okay, understood. Thank you so much.

Thank you. Next question comes from the line of Raman KV with Sequent Investments. Please comment.

Hi, sir. Thank you for allowing me to ask the question and congratulations on good set of numbers. I have two questions. One is on the Semicon JV part, Semiconductor JV with the Japanese company. Can you explain what are we trying to, like, under this JV, what are we trying to sell and what kind of product are we planning to create the business of this JV?

Yeah, so Raman, I will explain to you. So basically, we have, we are forming a joint venture company, which will be named as Rashi Restar Semiconductor Solutions Private Limited. This is a joint venture company with Restar Japan. Restar is a $4 billion Tokyo exchange listed. Semiconductor distribution company. They are basically into design, distribution of semiconductor solutions. So this, our existing embedded business, which Topol just mentioned, will move to this joint venture company, and then Ristar will buy 26% stake in this company for JV. By virtue of this JV, the advantages that will come to Rashi are mainly two. One, we will get all the products and solutions that are distributed by Ristar in Japan and world over, but that is always subject to the OEM manufacturer contract. And second, we will get access. We have all the Japanese manufacturers in India. So far, in our embedded vertical, we have all the Indian manufacturers as our customers, but we don't have a single Japanese manufacturer as a customer. So, it's a dual benefit for ASHI peripherals. One, we get newer products and lines from various suppliers, which will expand our offerings. And second, we will get Japanese customers. And third, Ristar is heavily focused on design services. They have more than 200 engineers on their roles. So by virtue of that, they will appoint a design engineer who will help us train our people. And if required, we will send them to Tokyo as well. So these are the three advantages of having this joint venture company.

Just a follow-up here, when you say design solution with respect to semiconductor, can you just elaborate what do you mean by that?

So, for example, I'll give you our example because it will be premature for me to give Restar example. Right now, the electric cars that are made in India by the Indian automobile companies, I am not at the liberty to name them. The headlights they use. This is the basic initial design done in our laboratory in Bangalore. So, similar kind of design for automobile applications, for robotic applications, etc., they will help us to design those in India for local manufacturing. So, this will also trigger and help us to penetrate more into the Indian manufacturing. Sector and also help accelerate Make in India initiative of the government.

Understood. My second question is with respect to the refurbishment business, can you just point out what percent of our total revenue is a refurbishment business?

Currently refurbished business is none. But, yes, someone already asked earlier, I think Sankleshya already asked, and there are a lot of people asking when will you start refurbished business. So, fingers crossed at this moment.

So, is there any timeline wherein you are aiming to start a refurbished business? No, that's why I said fingers crossed. Thank you.

Thank you. Next question comes from the line of H.R. Slakhani with Unify AMC.

Yeah, congratulations to the management team on stellar performance. I mean, credit goes to all of you. So my question, and I missed the opening, so forgive me if I'm repeating this question, but the Yota deal really demonstrated your ability to execute a large AI infrastructure development, a deployment, sorry. So, how are you thinking about similar opportunities going forward? Is the pipeline for large deals expanding? Do you intend to actively pursue them as a strategic lever or driver? Should we expect more of large deals in 27 and onwards? Thank you.

So, I think very good question, very close to my heart. And thank you for acknowledging that Rashi Perifus RPTEC created that capability of delivering and executing such large kind of AI data center projects. So, yes, it is there in our radar. The current pipeline, as you must be also seeing in the newspapers, there are so many AI data center projects. Thank you. But if need be, we decide then in the coming quarters, we can always win basis our credentials and reach. And last but not the least, yes, there is a good... Which will continue to be there for next three quarters at least.

I understood. Rajivji, I wanted to follow that up. There are lots of advantages of being an early mover. You are that, and you're very cautious in the way you all approach that deal and sort of stitched in the semantics. So, just wanted to get a sense that, and I'm sure that, you know, you're getting a lot of opportunities. So, I'm just trying to understand that, is it that, again, you're trying to find a deal where, you know, you can protect yourself fairly well, like how you did, and therefore participate in only such kind of opportunities, because you're being selective about, you know, participating in deals, or is it that capital is still a little bit of a constraint? I thought that post the IPO, the balance sheet expansion would have sort of helped us, which of course it has, but is it that you're finding the stretching of the balance sheet and you're having to basically decide between the run rate business and participating in large deals? What's the trade-off? I'm just trying to gain more insight here, sir.

You answered yourself. Obviously, we want to run or prioritize where ROIs or margins are higher. So, run rate business obviously gives a higher margin, which is evident from our results, and we've also grown 62%. Our debt ratio is also around 0.5, and once we take these kind of projects, our ratio also will go at least 2x. So we have to be little bit careful, so therefore we are prioritizing, but we are there in the race, and we have strong credentials, so if need be, we can always pick it up.

Understood. And I just want to ask you one other, maybe more strategic question, that by not participating in that deal, because, you know, it's coming at probably a higher working capital intensity, stretching, and your ROIs are probably a little lower than the core business. What is it that we stand to lose? I mean, are we, because yes, there is a short-term trade-off that you're making, but is there a long-term, larger ecosystem that, you know, that gets missed out? Unless you participate in those these activities, could you just give me some color on this? Thanks.

So, basically, by... Not giving the, I am not saying deprioritization, but by not giving the first priority in April, May, June quarter, we don't stand to lose anything. At the same time, I must also say that in these deals also, there are small component buyings are there. There we are already present. So in almost all these deals, some smaller. 20 crore, 50 crore, 70 crore, supply is already there. So it's not that we are not there. It's only that we are not prioritized to do 500 or 1,000 crore of deals just basically because of our 60% momentum, because of our working capital preference towards run rate business giving us high ROCE. So, if we decide, we can always take it in JAS quarter itself. And you will see some of them. If you are trying to ask, you will see some of them.

Understood, sir. Thanks and all the best.

Thank you. Next question comes from the line of Vivek Tulshyan. Will you mark capital? Please go ahead.

Hi. Just one question on the gross margin. This seems to be slightly lower than what we have been doing for the past few quarters. So is it that because of price, you know, component prices and product prices going up, there is some impact on percentage margin or this is a mixed issue?

Gross margin basically is the outcome of the product mix, so LIT and PES, two segments are there, PES share has increased, which is comparatively low margin as compared to the LIT, so one is the outcome of that. Second, last year, first quarter, we had a subsidiary which we hired off in first quarter, where the revenue gets into the GP, but the cost, which is service cost, It's shown in the other expenses category because of accounting standards. So that is the impact. Otherwise, these margins are, you know, normal as applicable to the industry and the product mix which was achieved in this quarter.

And the second question was on the net debt. Could you tell me the net debt figure for end of June?

Ah, 1,285. Close.

Okay, thank you.

Thank you. Next question comes from the line of Asim from Jam Capital. Please go ahead.

Yeah, hi. Good morning. So, just one question. So, I heard your comment on channel inventory earlier. You mentioned that they are selling slowly to make. The thing we need to make some inventory gain because we expect prices to go up.

Asim, we are losing you in between. Can you repeat the question once again? Shortage of laptops.

Sorry, am I audible?

Yeah, now we're clear. Can you repeat the entire question again?

Yeah, my apologies. I'll just repeat. So, on your earlier comment on channel inventory, they were selling slowly to make double-digit margins. I think one thing would be that they are being opportunistic because they expect prices to go up. So that's why they're sitting on inventory. But I just wanted to know that is there another read between the lines here that, you know, there's an actual shortage of laptops. And that is why... The channel doesn't want to sell laptops today ASAP because you said that they can sell it quite easily even today. Because if they sell it today at the X rate, next quarter or maybe in the next few weeks, the prices will be up, but they won't have enough laptops to sell. So is there a laptop shortage also to read between the lines over here on the ground?

Yeah, so in general, see, price is always a function of supply. So when the price rises happening, that means at the back end, first and foremost, component shortage is there. Second, laptop shortage is also there. So obviously, there is a general shortage, but I can only say that in terms of component, there is a huge shortage, but in terms of complete laptops, if we are able to pay price, Then, at least India, we are able to manage the inventory.

So it's a function.

Sorry, when you say if you are able to pay a price, are you also saying that the higher-end laptops are more available than the lower-end ones? That's also, I mean, basically the supply is a problem more at the lower-end versus the higher-end. Is that also a way to look at it?

Yeah, so entry-level laptops, there is almost 50% shortage, but if I go for medium and premium notebooks, If we are able to accept the price, then so far availability is not a concern. But what is happening is the prices are going up month over month. So partners, our T2 partners are holding inventory. Say for example, if they have bought at say 100 in July, but they already have an inventory which they have bought at 80 rupees somewhere in April or May, which they are selling right now. So that cascading chain is going on. But from demand side, especially on the commercial, there is no issue at all.

Thank you. Mr. Asim, please reach out to the queue for more questions. Next question comes from the line of Madhur Rati with Counter-Sectical Investments. Please come in.

Sir, thank you for the opportunity. Sir, I just wanted to understand how the data center deals, how are they panning out and are you mentioning to the previous participants? Because the hyperscalers won't be our target market. It would be either some… So either some tier two or someone new to the data center market or some other kitty in the hyperscaler business. So how is that panning out and how should we see that business moving for Rashi over the next two years? And a sub-question would be with VDA consolidation, how should we see Rashi bidding for these integrated distribute plus managed kind of services for these data center projects?

So, a very good point, Madhav. Rashi is obviously, like Rajesh mentioned earlier, I would like to rephrase them in my own words, is that Rashi continues to play a pivotal role in the data center opportunities. However, instead of going behind the last project, we are going behind those neo-clouds, smaller cloud service providers, niche operators who are giving AI-based solutions in their data centers. Where the run rates also happen on a regular cycle. So we've continued to participate with NVDR, with Supermicro and with other OEMs to participate meaningfully. Now, with VDA coming on board, it is a little few quarters away where we start integrating the opportunities and bidding for these projects. Currently, they will run independently between each other until we have a strategy to bid for the projects together. So as of now, I do not have any guidance to give that in next few quarters it will run anything together. It will have independent operating strategies for the time being.

Sir, that was from Ryan. Thank you so much and all of us.

Thank you. Next question comes from the line of Bijal Shah with RTL Investments. Please go ahead.

Yeah, thanks for the opportunity and congratulations on a very good set of numbers. It is very clear from your commentary that F-27 would be a spectacular year because of multiple tailwinds, but as this tailwind ease out through the year, how do you think of F-28? Historically, such strong years are followed by flat revenue, decline, or you are generally able to maintain the 20% growth rate, which we have demonstrated for 30 years. So, that's the only question I have. Thank you.

So, Bijal, you always, I repeat the same sentence that last 20 years we have given 20% CAGR despite the ups and downs of the industry. So, that is the base on which we continue to work even if that percentage value when we convert on 16,000 to 20% of 16,000 is always 3,000 crores. So, that is the base value. Thank you. So the acquisition of VDA, the joint venture company with Restar, these are all strategies of short-term and long-term value creation in terms of top line and bottom line. And that is why we are investing and we are working on this. So the entire management is very alert while we are taking advantage of this. situation, but we also want to have a sustained growth in the coming years, and we are very alert and sacrosanct with it.

Thank you very much.

Do not have an iota of doubt on our past 20 years and next few years as well.

Okay, that's very reassuring. Thank you very much, sir.

Thank you. Next question comes from the line of Yash Sidani with Integrity Ventures. Please go ahead.

Hi, sir. Just a question on some contingent lab meetings that are there in our books since long. I just wanted to check the basis of, like, is there a chance of getting a big hit in this liability? And what are the latest updates on this matter?

So, yes, these contingent liabilities are in the nature of, you know, reconciliatory shoppers notices which we receive. And as per, you know, applicable accounting guidelines and, you know, the governance guidelines, yes, we prudently show it as contingent liability. However, the history or the immediate history suggests that, you know, these kind of show cause notices have got, like certain show cause notices which have got closed, have got closed in less than 1% of the total liability shown in the, or demanded in the show cause notice. So, again, as I mentioned, it is the reconciliatory nature of Chopper's notices, which when company provides the, I'm typically talking about GST, where the volumes are looking high. So, it gets closed once the reconciliation is submitted to the authorities.

Okay, and are we expecting closure of these matters, like visual images?

Continuous, since the business is of continuous nature, these kinds of text authorities, like we are subject to. We have normal scrutinies on the audits from the tax authorities, which are most welcome, and we close it as and when it comes in due course of time. Law takes its own course and time to close these demands. But we have not ended up paying any or ended up incurring any significant liability against these historically also.

Thank you. Mr. Siddhani, please reach out to the queue for more questions. The next question comes from the line of Siddhartha Grover with AQUIRIS PMS. Please go ahead.

My condition is on good side of the presentation. Two questions. First, on the polyconductor type. So, if you could give us some light, some...

Mr. Global, sorry for interrupting. We cannot hear you. Can we come to the Ranger talk and speak a little louder? Yes, please go ahead.

Yes. So, congratulations to a good set of numbers, sir. Two questions. First on the semiconductor and the embedded piece. So, if you could tell us what is the kind of revenue and profitability that that division is earning, and how much money will Restart Putin in the JV for their 26% stake?

So, let me answer second question first. As far as money to be put in by a restart in the JV will depend upon the fair market valuation of the business at the time of entering into the SBA. So, to comment on that number, now it will be a premature estimation.

Yeah, and to answer your first question, so we are targeting in next three years maximum, we are targeting a revenue of... More than 100 million U.S. dollars under the JV.

Okay, and this JV comes with a higher margin profile than the co-distribution business?

Absolutely.

Thank you. Mr. Global, please rejoin the queue for more questions. The next question comes from the line of Jatin Chawla with RTL Investments. Please go ahead.

Yeah, hi. Good afternoon, and thanks for the opportunity. My question, again, is on the ReStar side. So, with the JV, what is the kind of addressable TAM that you will have in India?

So, the third-party report, which is there in our press release also, says that the government of India expects by 2030, the total TAM will be $150 billion. By 2030, India demand for semiconductor was $100 billion. Now they have revised to $150 billion by 2030.

And out of this, how much will be addressable by the JV?

Yeah. So, as we said, the addressability is too premature to say, but what I have already said that in the next three years' time, our aspiration is to do at least $100 million of business in the JV. And that's the very baseline considering the opportunity we have. But once we set up the entire operations and when we are on the road, then we will scale our numbers. At this juncture, we want to be very conservative and give only minimum guidance.

Got it. One more question. When I look at your growth numbers and even Reddington, there's a 60% growth, and you said you've gained kind of 10%, you know, from market share. So, are there smaller players from whom you are gaining market share, or, you know, where are you gaining this market share from?

So, I cannot talk for others, but I can only tell you that Apple to Apple comparison is not valid because we are there present only in stock and sell and second, commercial business. We are not there in software and services business. We are not there in mobile business. We are not there in logistics business. When I compare even Apple to Apple, then it is very clearly evident that we have internal data that we have gained some market share across the industry, which may be one distributor or two distributors or three distributors. We don't know that.

Got it. Thanks a lot.

Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thank you all for your engagement and for thoughtful questions this morning. Let me leave you with three thoughts again as we close. First, on the environment, we are in one of the most opportune periods of industry that has ever seen over a decade. Yes, pricing is elevated. But for a distributor of our scale, this is a tailwind, not a headwind. There are messages from global technology brand of improved supplies this quarter, but yet to be seen in action. We intend to keep converting that advantage into profitable growth, exactly as we did this quarter. Second, on our direction, this quarter was not just about a record top line and record returns. Though we are proud of both, it was about proof of execution on our strategy. And the third. What we reported today reflects the trust of our shareholders, the partnership of AD Plus Global Brands, and the loyalty of 10,000 plus channel partners. Coupled with the effort of our RPTech family, we remain firmly committed to profitable, capital efficient, sustained growth, and to be transparent with you at every step in the way, whether in good cycles or in challenging ones. We are optimistic about the year ahead, and we look forward to updating you on a continued progress next quarter. Thank you once again for your time, your trust, and your confidence in Rashi Peripherals. Thank you so much.

Thank you. On behalf of Rashi Peripherals Limited and Monarch Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.