Rashi Peripherals (NSE:RPTECH) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Rashi Peripherals Limited Q1 FY 'twenty seven 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. 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 Pansari, Managing Director and Promoter of the company Mr. Rajesh Moenka, CEO and Mr. Himanshu Sharma, CFO of the company. I hand over the call to you, sir. Thank you.

0:53 Thank you, Vinay. Good morning, everyone, and a warm welcome to our earnings call for the first quarter of fiscal year twenty twenty six-twenty twenty seven. Thank you for your time and your continued interest in Rashi Peripherals Limited. I'll be covering four things today: the industry background our performance for the quarter the progress on our strategies and how we see the road ahead. We are in one of the most consequential periods our industry has seen in over a decade, unfolding almost exactly as we described in the previous calls. Three forces are converging at once. First, the multiyear PC refresh cycle.

1:40 The move away from Windows 10 has triggered a sustained hardware replacement wave across enterprise and commercial users. A multiyear cycle, not a one quarter bump with real room still to run. The second is the AI PC inflection. 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 forecast expected to persist sorry, independent forecast expected to persist through 2028 as well.

2:47 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 who take share when others cannot get product, that is Rashi. And believe the cycle sets a far larger structural story. The Indian ITC distribution opportunity is over INR 1.5 lakh crore with P2C penetration still only in the mid teens. As digitization deepens into Tier two, three and four India, the runway is enormous.

3:33 This is a multiyear opportunity, and we have built this company to capture it. Now let me turn how that translates into our numbers. This was on multi measures, our strongest quarter yet. On a consolidated basis, revenue grew 61.9% year on year to INR 5,100 crores, with EBITDA growing 50% to INR 155 crores and PAT growing at INR 69.5% to 105 crores with diluted EPS of INR 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 ROCE and ROE since our listing at approximately 19.519.8%.

4:28 That is the number to hold on to. We are not chasing 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 fifty six days, and our operating leverage is visible. Profit grew faster than revenue because as prices rise, our absolute margin grows while our cost base stays broadly stable. Now the part that I'm most energized to share. Over several quarters, we've laid out a vision built on three strategic pillars. This quarter, we moved decisively from intent to execution on everyone.

5:15 Our pillar number one is our core engine of personal computing enterprise lifestyle and component economics. This powerhouse funds everything else and it fired on 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 center our AI and high performance computing portfolio and opened two new branches in Udaipur and Dulai, extending our reach into the C and D class cities where penetration is the lowest. Reach, relationships and execution remains the bedrock on which everything else is built.

6:04 Our pillar number two 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 clientel tenures.

6:52 This is forward integration in action. It moves us up the value chain and shifts the quality and durability of our earnings. And we've structured it so that the founders retain a meaningful stake through a stage 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 a 74% Rashi and 26 Restar focused on advanced imaging image sensing solutions for industrial and automotive applications.

7:45 It pairs Restar semiconductor technology, supplier relationships and application know how with our pan India distribution reach and execution. It also includes direct skill transfer from Japanese design expert who will train our engineers, backing our 50 plus local engineering hires over next two years. Our first step in semiconductor back in 2021 is beginning to take shape. As India moves towards a $150,000,000,000 semiconductor market by 2030, this is a business that will structurally become a growing source of our future ROCE and ROEs. I would 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.

8:41 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. We are to be realistic about the environment as well. Pricing is elevated, and there may be pockets of consumer affordability pressures in the second half. But our diversification across two strong 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.

9:38 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 Goenka, will be happy to take your questions. Thank you. Thank you, Kapal, and good morning, everyone. It is my privilege to present our financial results for the quarter ended June 2026.

10:24 And I want to begin by stating that, please explain me, we have just delivered the strongest quarter in the history of this company. Not incrementally stronger, decisive, stronger across every metric that matters to you. On a consolidated basis, revenue from operations stood at INR 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 INR105 crores, delivering a bad margin of 2.05%. Profit before tax grew 73% to INR139 crores with PBT margins expanding to 2.72%.

11:11 On a standalone basis, the performance is equally compelling. Revenue came in at INR4832 crores, up 58% year on year. EBITDA grew 50% to INR164 crores with margins of 3.38%. PAT increased 65% to INR97 crores at a margin of 2.01%. And PBT grew 65% to INR130 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 made this quarter especially noteworthy is not just the scale of growth, it is the quality of growth.

12:01 We grew the top line aggressively while simultaneously sharpening our balance sheet discipline. Inventory rates tightened to fifty five days, debtor stays stood at forty one, creditors stood at 40 and overall working capital days improved year on year to fifty six days. For a business growing at this stage, 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 PAT. On a stand alone basis, INR4832 crores in revenue, INR164 crores in EBITDA and INR197 crores in PAT, all time highs across every key metric. This is not a peak, it is a foundation.

12:51 With that, I'm delighted to hand it back to the moderator and open the floor for your questions. Thank you. Thank you. We will now begin the question and answer session. The first question comes from the line of Amit Ketan with Lebanon Capital. Congratulations on a great quarter. So my first question is on the demand side, right?

13:38 When we look at some of the global distributors who are listed abroad, all of them are reporting strong numbers. However, the 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, party reports indicate that there will be a reduction of about I think my voice is echoing. Yes. Speaker, just give me a moment. Yes. Go ahead. Yes. So I'll repeat my answer, Amit Mr. Amit Kedan. So all third party reports indicate that there will be a reduction in the total size of the market by about 10% unit wise.

14:41 However, prices continue to rise due to the shortage of particularly memory, hard drive and CPU. 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 there and 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.

15:32 Ishunath, more relating to why is the demand so much higher in India relative to the rest of the world? So the factors that you outlined are sort of common globally, right? But why is demand in India so much higher than, say, the West? Yes. 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.

16:26 So therefore, we will 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. If you look at our overall business, could you give some sense of the split between the consumer segment versus, say, the commercial and the enterprise segment? Just a rough split of how much is that 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.

17:33 But I must also add that consumer, there is still slowdown because of the affordability. The laptop prices, for example, has 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 postponing 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. Understood. Thank you and all the best.

18:20 Thank you. You. Next question comes from the line of Bhavin Chedra with Enam Holdings. Please go ahead. Good morning team and congratulations to the entire team for record numbers and also along with the record numbers of maintaining a very strong balance sheet. So that was a very positive outcome of despite strong numbers, the balance sheet has been under control. So 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.

19:12 So 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 rate? And as you mentioned in your opening comments, the prices of memory hard drive CPUs 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, I'll try to answer point to point. So first and foremost, if I look at the breakup of our 60% growth on April, May, June versus April, May, June, broadly speaking, 30%, 35% has come from the price increase.

20:02 5% to 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 we 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.

20:55 July, August, September traditionally has been a very high quarter. In the previous calls, I have always mentioned that there is a fight between Jazz 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 the 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.

21:54 Yes, 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, you have done a couple of acquisitions plus JVs and all that. So can you give some insights on that how revenue contribution from these new ventures will flow in whether second half currently or next year? How we should look at this new pivot over 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. But to start with the acquisition that we have done, approximately 5% of our revenue portfolio will come from these integrated services and value added solutions.

22:47 To give you a precise outlook on how should we look at it, I think we'll 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 going to take. Similarly, on the semiconductor side, again, this is a JV that we formed as a step down subsidiary of Rashi Peripherals Limited. And that step down subsidiary will form a JV with the organization with the Japanese Restart Corporation. The moment we do that, the numbers are also going to come back reported in the 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 digit, sometimes in excess also, and this will continue to accelerate.

23:42 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 here. Thank you. Next question comes from the line of Hitesh Kuala with Origin Capital. 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, but 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 on it?

24:36 Yes. 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, presales, 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 INR850 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.

25:26 And sir, my second question would be on the supply constraints, right? So we are hearing from the asset that there is supply constraints in terms of we see it's because of pricing and also global AI demand. They supply constraint on the chips and all which are coming, which is which which do you think that can also impact volumes in the second half? Yes. So there is a potential risk, yes. But at the same time, now Rashi Peripherals is in the industry for more than thirty 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.

26:18 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 just one 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 FY twenty seven in Dell? We are above the target as far as numbers are concerned. That's what I can say there. Okay. Okay, sir. All the best, sir. Thank you. Thank you. Next question comes from the line of Ayush Chhaburi with Shrivast Capital. Please go ahead.

27:04 Yes. Congrats on a good set of numbers. If you could just give us some sense on how the inventories 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. Think Bhavan Bhai also mentioned that we have a high inventory and which also means that July, August, September sales will be good, so 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 as 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 buildup in inventory across all the channels because all our T2 partners are trying to make double digit margins. So they are selling slowly.

28:04 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. 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 cost 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 a thing? Just your thoughts on this.

29:13 So overall PC TAM in India is about 15,000,000 to 16,000,000 PCs per year. So and refurbished, some people say it is zero five million, some people say 1,000,000. So even I assume that the PC TAM is about 1,000,000, 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 that availability is also not easy because now the refresh cycle of most enterprise have increased from three to four or four to five. 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.

30:08 So we are not too much worried of it about it. Understood. And one last question, if you would just split the top line growth between volume and value, it will be great. Yes. So in terms of unit wise, we have grown by about 20%. Overall, actually, when the reported numbers you see, there is a 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 will increase improve our market share by also by about 10%.

30:57 All right. Thank you so much. All the best. Thank you. Next question comes from the line of Nishita Shanklesha with Saphiles Capital. Please go ahead. Hello. Am I audible? Yes. 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 FY 'twenty six. So like does that mean that in Semicon segment, we have a revenue of around INR 11,000 crores? Let me please clarify that it has the revenue of semiconductor portfolio compared to FY 'twenty six in first quarter has grown by 70%.

31:47 It is not that our overall revenue 70% is semiconductor. 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? Yes. So as I said, I've 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. We are on a very strong footing as far as Q2 is concerned.

32:38 Okay, understood. Thank you so much. Thank you. Next question comes from the line of Raman K. V. With Sequent Investments. Please go ahead. Congratulations on good set of numbers. I have two questions. One is on the semicon JV part, semicon JV 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.

33:32 This is a joint venture company with Restar Japan. Restar is $4,000,000,000 Tokyo Exchange listed semiconductor distribution company. They are basically into design distribution of semiconductor solutions. So this our existing embedded business, which Kapil just mentioned, will move to this joint venture company. And then the Star will buy 26% stake in this company for JV. By virtue of this JV, the advantage that will come to Rashi are mainly two.

34:21 One, we will get all the products and solutions that are distributed by Restar in Japan and all over. So but that is always subject to the OEM manufacturer contract. And second, we will get access to 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 Rashi Peripherals. One, we get newer products and lines from various suppliers, which will expand our offerings.

35:10 And second, we will get Japanese customers. And third is Restart 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. With... When you say design solution with respect to semiconductor, can you just elaborate what what do you mean by that? So for example, I'll give you our example because it'll be premature for me to give rest our example.

35:56 Yeah. Yeah. Right now, the electric cars that are made in India by the Indian automobile companies, I'm not at the liberty to name them. The headlights, they use chips and the basic initial design done in our laboratory in Bangalore. So similar kind of design for automobile applications for robotic applications, etcetera, will 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.

36:50 Understood, sir. And sir, 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? Like, wherein we can refurbish... Currently, refurbished business is none. But, yes, someone already asked earlier. I think Sanklesha asked... 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're aiming to start a No. That's why I said fingers crossed. Understood, sir. Thank you. Thank you. Next question comes from the line of Ejjas Lakhani with Unifi AMC. Please go ahead.

37:42 Yes. Congratulations to the management team on a stellar performance. Credit goes to all of you. So my question, and I missed the opening, so forgive me if I'm repeating this question. But sir, the Utah deal really demonstrated your ability to execute a large infrastructure development, right, the 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 2027 and onwards? Thank you. So I think very good question, very close to my heart. And thank you for acknowledging that Rashi Peripherals, RPTECH created that capability of delivering and executing such large kind of AI data center projects.

38:41 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 announced by the big groups across the length and breadth of the country. We are all there in those projects also. However, at this moment, particularly in April, May, June quarter, I would say that we did not go all out on this front because we were already having a 60% growth. We were in the need of working capital, building up inventory as well. So we did not go aggressively for this. 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 pipeline of these projects, which will continue to be there for next three quarters at least.

39:44 Understood. Rajesh, I wanted to follow that up that she said 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 semantic. So just wanted to get a sense that and I'm sure that you're getting a lot of opportunity. So I'm just trying to understand that, is it that again you're trying to find a deal where 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 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 and 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?

40:42 What's the trade off? I'm just trying to gain more insight here. Thanks. Absolutely. You are not on your 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 and 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.

41:31 Understood. And I just want to ask you one other maybe more strategic question that by not participating in that deal because 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 gets missed out unless you participate on those fees actively? Could you just give me some color on this? Thanks. So basically by not giving the I'm not saying deprioritization, but by not giving the first priority in April, May, June quarter, we don't stand to lose anything.

42:24 At the same time, I must also say that in these deals also, there are small component binds are there. There we are already present. So in almost all these deals, some smaller INR 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 INR 500 crores or 1,000 crores of deals, just basically because of our 60% momentum, because of our working capital preference towards run rate business giving us high ROCE. But we are there everywhere. So if we decide, we can always take it in Jazz quarter itself. And you will see some of If you're trying to ask, you will see some of them.

43:13 Understood, sir. Thanks and all the best. Thank you. Next question comes from the line of Vivek Sulsian with Newmark Capital. Please go ahead. 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 component prices and product prices going up, is some impact on percentage margin or this is a mix issue? Gross margin basically is outcome of the product mix. So LIT and PES two segments are there. PES share has increased, which is of comparatively low margin as compared to the LIT.

44:02 So it's one is outcome of that. Second, last year, first quarter, we had a subsidiary which we had often first quarter where the revenue gets into the GP, but the cost, which is service cost is shown in the other expenses category because of accounting standards. So that is the impact. Otherwise, these margins are normal as applicable to the industry and the product mix, which was achieved in this quarter. Got it. And the second question was on the net debt. Could you tell me the net debt figure for end of INR $12.85 crores. Got it. Okay. Thank you. Thank you. Next question comes from the line of Asim from JAM Capital.

44:58 So just one question. So I had earlier comment on channel inventory earlier. You mentioned that they are selling slowly to make thing or maybe to make some inventory gain because they expect prices to go up. Assim, we are losing you in between. Can you repeat the question once again? Shortage of laptops. Sorry. Am I audible? Yeah. Now I'm clear. Can you repeat the entire question again? Yeah. Yeah. My apologies. I'll just repeat. So on your earlier comment on channel inventory, is that 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.

45:44 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? Yes. 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.

46:31 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 of price. 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 than 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.

47:27 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 INR 80 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 rejoin the queue for more questions. Next question comes from the line of Madhu Rathi with Counter Septical Investments. Please go ahead. Sir, I just wanted to understand on the data center deals, how are they panning out? And are you mentioned to the previous participants?

48:18 Because the hyperscalers won't be our target market. It would be either either some some tier two or someone new to the data center market or some low... Some other kitty in the hyperscaler business. So how is that planning out, and how should we see that business moving for Rashi over the next two years? And a sub portion would be with VDA consolidation, how should we see Rashi bidding for these integrated sub... Distribute plus managed kind of services for the data center projects? So a very good point, Madhur. 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.

49:09 However, instead of going behind the large project, 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 NVIDIA, with Super Micro and with other OEMs to participate meaningfully. Now with VD 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.

50:00 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 an independent operating strategies for the time being. Got it. Sir, that was from my line. Thank you so much and all the best. Thank you. Next question comes from the line of Pijal Shah with RTL Investments. Please go ahead. Yes. Thanks for the opportunity and congratulations on very good set of numbers. See, is very clear from your commentary that F 'twenty seven will be a spectacular year because of multiple tailwinds. But as this tailwind ease out through the year, how do you think of F twenty eight? Is it historically such strong year are followed by flat revenue decline or you are generally able to maintain the twenty percent growth rate, which you have demonstrated for thirty years?

51:01 So that's the only question I have. Thank you. So Bijal, we always I repeat the same sentence that last twenty 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 on the INR 3,000 crores. So that is the base value. Second, the acquisition of VDA, the joint venture company with Restar, these are all strategies of long term 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 current situation, but we also want to have a sustained growth in the coming years. And we are very alert and sacrosanct with it.

52:04 You very much and all the best. Sir, do not have an iota or doubt on our past twenty years and next few years as well. Okay, okay. That's very reassuring. Thank you very much, sir. Thank you. Next question comes from the line of Josh Siddani with Integrity Ventures. Please go ahead. Hi, sir. Just a question on some contingent liabilities that are there in our books since now. I think there are two ESG matters which are there. Just wanted to check the basis of that is there a chance of getting a big big hit in this liability?

52:50 And what are the latest updates on this matter? So yes, these contingent liabilities are in the nature of reconciliatory shoppers notices which we receive. And as per applicable accounting guidelines and the governance guidelines, yes, we prudently show it as contingent liability. However, the history or the immediate history suggests and that these kind of showcase notices have got like certain showcase notices, which have got closed, have got closed in less than 1% of the total liability shown in the or demanded in the show cost notice. So again, as I mentioned, it is reconciliatory nature of show cost notices, which when company provides the I'm typically talking about GST where the volumes are looking high.

53:44 So when it gets closed once the reconciliation is submitted to the authorities. Okay. And then are we expecting closure of the impetus like vision immediate business is of continuous nature. These kind of tax authorities like we are subject to normal scrutiny on the audits of 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 to 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. Siddani, please rejoin the queue for more questions. The next question comes from the line of Siddhartha Gruber with Equities PMS. Please go ahead.

54:36 Actually, she's on good side of results, sir. Two questions. First, on this telephone of the site. So if you could give us a the sunlight some Mr. Grover, sorry for interrupting. We cannot hear you. Can we come the ranger talk and speak a little louder? Better now. Yes. Please go ahead. Yes. So congratulations on 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 running? And how much money will restart putting in the JV for the 26% stake? So let me answer second question first. As far as the 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.

55:26 So to comment on that number, now it will be a premature estimation. Yes. And to answer your first question, so we are targeting in next three years maximum, we are targeting a revenue of more than US100 million dollars under the JV. Okay. And this JV comes with up now higher margin profile than the core 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. Yes. Hi, good afternoon, and thanks for the opportunity. My question again is on the Resta side.

56:13 So on the 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 government of India expects by 2030, the total TAM will be USD 150,000,000,000. So earlier by 2030, India demand for semiconductor was US100 billion dollars Now they have revised to US150 billion dollars by 2030. And out of this, how much will be addressable by the JV? Yes. So as we said, the addressability is too premature to say, but what I have already said that in next three years' time, our aspiration is to do at least $100,000,000 of business in the JV.

57:11 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. Got it. One more question. When I look at your growth numbers and even Redington, there's a 60% growth. And you said you have gained kind of 10% from market share. So are there smaller players from whom you are gaining market share or 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.

58:03 We are not there in mobile business. We are not there in logistics business. But when I compare even apple to apple, then it is very clearly evident that on how we have internal data that we have gained some market share across the industry, which may be a one distributor or two distributor or three distributors. We cannot 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.

58:51 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 and 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.

59:39 And the third, on our commitment. Every number we reported today reflects the trust of our shareholders, the partnership of 80 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 our continued progress next quarter. Thank you once again for your time, your trust and your confidence in Rashi Peripherals.

1:00:25 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.