Rectitude Holdings Ltd (RECT) AI Stock Analysis

• Market Cap: $23.34M
• Dividend Yield: N/A
• Average Volume (3M): 22.02K
• Price to Earnings (P/E): 18.2
• Beta (1Y): 0.14
• Revenue Growth: 6.70%
• EPS Growth: -30.54%
• Country: US
• Employees: 107
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Distribution
• EPS (TTM): 0.10
• Shares Outstanding: 14,500,000
• 10 Day Avg. Volume: 5,511
• 30 Day Avg. Volume: 22,017
• PEG Ratio: 0.25
• Price to Book (P/B): 8.22
• Price to Sales (P/S): 1.59
• P/FCF Ratio: 16.63
• Enterprise Value/Market Cap: 1.36
• Enterprise Value/Revenue: 0.72
• Enterprise Value/Gross Profit: 2.15
• Enterprise Value/Ebitda: 6.95
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 50 Neutral
• Price Target: $1.50 ▼(-11.76% Downside)

Rectitude Holdings Ltd's overall stock score is primarily influenced by its strong revenue growth and improved balance sheet, which are offset by declining profitability margins and significant cash flow challenges. The bearish technical indicators further weigh on the score, while the moderate valuation provides some balance. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

Revenue Growth

A 41.1% year-over-year revenue surge indicates durable demand across RECT's portfolio and validates its deal sourcing and value‑creation approach. Sustained top-line expansion supports reinvestment, scale advantages for portfolio firms, and a longer runway to recover margins.

Reduced Leverage

Material deleveraging and a >56% equity ratio lower financial risk and enhance funding optionality. That stronger capital structure provides capacity to pursue acquisitions or support portfolio companies without excessive refinancing risk, improving medium-term resilience.

Diversified Investment Model

Exposure across technology, healthcare, and renewables reduces single‑industry cyclicality and captures structural growth themes. Diversification plus a sustainability focus can attract strategic and impact capital, stabilizing inflows and improving long-term opportunity sourcing.

Negative Factors

Weak Cash Conversion

Severely negative free cash flow growth and almost no operating cash conversion of reported income limit RECT's ability to fund operations, portfolio support, or buybacks from operating cash. This increases reliance on external financing and elevates liquidity risk over months.

Declining Profitability Margins

Falling net margins despite healthy gross margin suggest rising operating costs or lower leverage benefits within the portfolio. Persistently compressed margins can erode return generation from investments and require structural cost or strategy changes to restore sustainable profitability.

Lower Return on Equity

A sharp ROE decline signals the company is generating far lower returns on shareholders' capital than prior periods. If persistent, this diminishes long-term shareholder value creation and may indicate weaker portfolio performance or capital allocation inefficiencies needing corrective action.

Rectitude Holdings Ltd Business Overview & Revenue Model

Company Description

Rectitude Holdings Ltd. offers a comprehensive range of safety equipment, including personal protective clothing, safety gloves, step platform ladders, safety footwear, travel restraint and personal fall arrest equipment, portable fire extinguishers, firefighting equipment, fire-related safety products, traffic products, and industrial hardware tools. The company markets its products under various brands such as D&D, SkyHawk, Super Sun, STRIKERS, Osprey, HORNET, and DADE. ​

How the Company Makes Money

Rectitude Holdings Ltd generates revenue primarily through its investment portfolio, which includes equity stakes in various companies across its targeted sectors. The company earns capital gains through the appreciation of its investments, as well as dividends from its equity holdings. Additionally, RECT may engage in strategic partnerships and joint ventures that provide supplementary income streams, such as revenue sharing agreements or consulting services. The company's focus on sustainable and socially responsible investments enhances its appeal to a growing market of impact investors, potentially increasing its access to capital and funding sources.

Rectitude Holdings Ltd Financial Statement Overview

Summary

Rectitude Holdings Ltd shows strong revenue growth and a healthier balance sheet with reduced leverage. However, declining profitability margins and significant cash flow challenges pose risks to financial stability. The company needs to address operational inefficiencies and improve cash flow management to sustain growth and profitability.

Income Statement

Rectitude Holdings Ltd has demonstrated strong revenue growth with a 41.07% increase in the latest year, indicating robust demand and market expansion. However, the net profit margin has decreased to 5.11% from 8.11% the previous year, suggesting increased costs or pricing pressures. The gross profit margin remains healthy at 33.65%, but the decline in EBIT and EBITDA margins indicates potential operational inefficiencies.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.35 from 1.12, reflecting a stronger equity position and reduced leverage risk. However, the return on equity has dropped to 9.04% from 41.84%, indicating reduced profitability relative to shareholder equity. The equity ratio of 56.67% suggests a stable financial structure with a good proportion of assets financed by equity.

Cash Flow

Rectitude Holdings Ltd faces challenges in cash flow management, with a significant decline in free cash flow growth rate to -208.96%, indicating negative cash generation. The operating cash flow to net income ratio is low at 0.016, highlighting potential issues in converting income into cash. The negative free cash flow to net income ratio further underscores cash flow constraints.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2023	Dec 2022
Income Statement
Total Revenue	43.80M	43.80M	20.61M	41.35M	29.81M
Gross Profit	14.74M	14.74M	6.12M	14.71M	8.74M
EBITDA	4.56M	4.56M	5.32M	5.88M	3.59M
Net Income	2.24M	2.24M	2.15M	3.36M	2.08M
Balance Sheet
Total Assets	43.69M	43.69M	16.24M	34.21M	25.25M
Cash, Cash Equivalents and Short-Term Investments	6.65M	6.65M	1.38M	3.47M	1.14M
Total Debt	8.69M	8.69M	4.03M	8.94M	7.53M
Total Liabilities	18.92M	18.92M	9.88M	19.62M	15.80M
Stockholders Equity	24.77M	24.77M	6.35M	8.02M	9.45M
Cash Flow
Free Cash Flow	-968.43K	-415.68K	1.99M	3.96M	1.13M
Operating Cash Flow	-502.05K	200.13K	2.00M	4.20M	1.32M
Investing Cash Flow	-6.28M	-5.80M	-7.21K	-230.35K	-188.66K
Financing Cash Flow	8.76M	8.77M	-1.28M	-2.93M	-1.00M

Rectitude Holdings Ltd Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.70
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RECT, the sentiment is Negative. The current price of 1.7 is below the 20-day moving average (MA) of 1.72, below the 50-day MA of 1.82, and below the 200-day MA of 3.57, indicating a bearish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 34.41 is Neutral, neither overbought nor oversold. The STOCH value of 59.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RECT.

Rectitude Holdings Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BRIA	61 Neutral	$49.75M	―	―	8.21%	―	―
RECT	50 Neutral	$23.34M	18.15	11.45%	―	6.70%	-30.54%
HTLM	44 Neutral	$225.12M	―	―	―	―	―