Valley were knocked out of the Birmingham Senior Cup on penalties at Coleshill Town.
Rugby looked like they had booked a trip to Leamington in the Quarter-Finals of the competition when Drew Lowe pounced to scored his first goal for the club on 79 minutes, but Marvellous Onabirekhan's quickfire equaliser took the game to a shoot-off, where new signing Callum Woodward and Trey Charles both missed from the spot to send the hosts through instead.
The experienced ex-Coventry Sphinx man Woodward had signed earlier in the day and made his Valley debut at Pack Meadow as did the on-loan Wolves academy keeper Xander Grieves - who is more than 20 years Woodward's junior.
There was a relatively even start to the game, although it was the hosts that accounted for the majority of the early scoring attempts. Bassit Mandey fired one wide for them from a decent position, with Alex McSkeane then almost getting in behind the Rugby - only to be halted by the timely intervention of Sam Tye.
McSkeane had a further effort from the edge of the box blocked, with Mason Rees firing one way over, before the visitors missed out on a good opportunity of their own when Teddy Rowe lifted one over after Tye had laid the ball back to him.
Ex-Valley winger Theo Rowe rippled the Rugby side-netting and Tristan Dunkley's effort was blocked, whilst Rivel Mardenborough was also blocked out after an excellent crossfield pass to him by Trey Charles.
Grieves then pulled off the first of a number of impressive saves on his debut to keep out Mandey's strike from the left-hand side, with the young stopper also competently plucking Oliver Burgundy's shot from the edge to his chest.
Lowe's neatly chipped cross almost created something for Rugby, before a further delivery from wide by Teddy Rowe was headed clear to safety.
Town's increasingly encouraging end to the first-half culminated with Josh Thomas neatly nodding down a Charles corner but Lowe was just unable to force the ball back across the goalmouth.
The second-half started with relatively comfortable save from Grieves to Theo Rowe's low strike, with the teenager then doing well to punch clear a threatening Ben Usher-Shipway cross.
Town youth teamer Fabian Stolowski - who had replaced the injured Geoffrey Lundoloki just before the hour mark - then made a storming run down the right before guiding the ball into Lowe to lay it back to Charles, who lifted his shot over the frame.
Grieves's best save of the match soon followed though, when Theo Rowe span his marker and slipped in Dunkley, but Grieves was quickly off his line to narrow the striker's angle and deny him with a combination of his hand and leg.
George Cleet's speculative free-kick drifted just wide for the Colemen, and Giovanni Dainty blazed a half volley way over.
Mardenborough then took too long to get his shot off after he had found some room in behind the hosts' defence, before Lowe broke the deadlock with his far post finish to Charles's deep, looping free-kick.
However, Valley's lead lasted only four minutes when Onabirekhan's neat-flick to Usher-Shipway's low cross finally beat Grieves.
The Town keeper was soon back in the action with a full-length one-handed save to Usher Shipway's shot on the turn, and followed this with another diving stop to sub Red Simmons's shot from the edge of the box.
Rugby's players appeal for a penalty for a handball to Ted Rowe's corner at the death were turned away, meaning the game would be decided via a penalty shoot-out, and although Kobi Bivens and Teddy Rowe both successfully converted from twelve yards, Woodward struck a post with his spot-kick and Cameron Belford was down well to keep out Charles's - with the home side netting all four of theirs despite the best efforts of Grieves between the sticks.
