Prabhudas Lilladher’s research report on Redington (India)
Redington delivered strong result in Q4FY19 with broad based growth across segments, better operational performance led to expansion in margins and PAT. Both India business and oversees business delivered strong growth in FY19. Management is focused on growing its earnings in double digit in FY20E. In India, IT Enterprise and Mobility is expected to post double digit growth. In India segment, revenue growth might be lower for Q1/Q2 quarters given the general slowdown in the economy; however, Q3 onwards growth is expected to pick-up. From a revenue perspective, India should be able to post better growth versus overseas. With Redington India business showing strong growth & good performance from overseas, we believe Redington is in a comfortable position to deliver sustained earnings growth in FY20E.
We maintain our buy rating with revised TP of Rs114 (7x FY21E EPS). Currently, Redington trades at 7.2x/6.1x FY20E/21E at an EPS of Rs13.8/Rs.16.2 for FY20E/21E respectively. Currency movements in overseas market remains a key risk to Redington.
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