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Redington India Q4FY14 results update

June 3, 2014, Tuesday, 11:29 GMT | 06:29 EST | 14:59 IST | 17:29 SGT
Contributed by Nirmal Bang


Q4FY14 results were in-line with our expectations. Revenues were above our expectations on the strong growth seen in the India business (grew 16.5% YoY). Overseas revenues were mainly boosted by the currency which grew by 21.4%. EBIDTA margins were marginally lower during the quarter. Apple business has shown strong performance in Q4 as well as in FY14 (grew by 220% + YoY). Redington has strategically changed its overall product portfolio and has included tablets and ipads and also has included vendors like Lenovo and Samsung which has assisted. Company expects better momentum in FY15 and since it enjoys leadership position in the products it deals, we expect it to grow its business in infant markets like Africa and Turkey. Our initial target of Rs.107 has been achieved and now we are introducing FY16E numbers. At CMP, the stock is trading at a P/E of 9.7x/8.1x its FY15E / FY16E expected earnings and we recommend investors to buy the stock for a target price of Rs.130.


Quarter highlights

- Revenues for the quarter grew 14%/19% QoQ/ YoY on the back of good traction in the India business.

- During the quarter, West Africa has made good progress with company launching new Smartphones like Motorolla. On the other hand, company has lost some market share in East Africa.

- EBIDTA margins were down by 33 bps on the back of lower margins in some of the overseas non IT products.

- PAT after minority interest grew by 7.8% YoY to Rs 113 crore. This includes Rs. 9 crore loss from the NBFC sale during the quarter.

- Company plans to add more Smartphone clients to the overall portfolio.


India Operations – Regained growth Momentum

India business posted growth of 16.5%/12% YoY/QoQ in revenues. Blackberry business continues to struggle while Apple products have been well received in the market. IT as well as non IT business has done well during the quarter. Company expects huge orders for i-phone5 in the coming quarters as well as for tablets in India.


Overseas Operations – Good show partly due to rupee depreciation

Revenues grew 15%/21.4% QoQ/YoY to Rs.3694 crore. 10-11% of the YoY growth came in due to ru