Rectitude Holdings Ltd (RECT) AI Stock Analysis

• Market Cap: $21.03M
• Dividend Yield: N/A
• Average Volume (3M): 22.02K
• Price to Earnings (P/E): 16.3
• Beta (1Y): 0.16
• 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: 0.65
• Enterprise Value/Gross Profit: 1.94
• Enterprise Value/Ebitda: 6.27
• 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

Strong Revenue Growth

A 41.07% revenue increase in the latest year signals durable demand and portfolio appreciation for an investment holding. Sustained top-line growth supports reinvestment into core sectors, enhances deal sourcing power, and provides a runway to scale holdings and improve long-term returns.

Improved Balance Sheet / Lower Leverage

Material de-leveraging to a 0.35 debt-to-equity and a 56.67% equity ratio materially improves financial flexibility. Lower leverage reduces interest burden and tail-risk, enabling opportunistic investments, M&A or capital support for portfolio companies without excessive refinancing pressure.

Diversified, sustainability-focused model

A diversified holdings model across tech, healthcare and renewables reduces sector concentration and benefits from structural growth themes. The sustainability focus also aligns with rising impact capital, improving long-term access to funding and investor base stability for portfolio expansion.

Negative Factors

Severe Cash Flow Weakness

A >200% decline in free cash flow growth and an operating cash flow to net income ratio near zero indicate persistent cash conversion problems. Weak cash generation constrains the firm's ability to fund investments, reduce leverage further, or cover operational needs without external financing.

Declining Profitability and ROE

A collapse in ROE and a falling net margin reflect diminished returns on shareholder capital and weakened operating economics. Over time this reduces the firm's ability to compound equity value, weakens investor returns from portfolio exits, and signals necessary operational fixes.

Earnings Power Eroding (EPS Decline)

A roughly 30% decline in EPS growth highlights deteriorating earnings power that may persist if cash flow and margin issues remain. This erosion constrains retained earnings for reinvestment, limits dividend capacity and may force dilutive or costly financing to support growth plans.

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

Rectitude Holdings Ltd Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.70
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• 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 above the 20-day moving average (MA) of 1.62, below the 50-day MA of 1.72, and below the 200-day MA of 3.44, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 25.60 is Positive, neither overbought nor oversold. The STOCH value of 24.99 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
BRIA	65 Neutral	$56.25M	―	―	8.21%	―	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
RECT	50 Neutral	$21.03M	16.35	11.45%	―	6.70%	-30.54%
HTLM	44 Neutral	$225.12M	―	―	―	―	―