Buy Redington (India), target price Rs 167: Prabhudas Lilladher

Prabhudas Lilladher has buy call on Redington (India) with a target price of Rs 167. The current market price of Redington (India) is Rs 142.75. Time period given by analyst is one year when Redington (India) Ltd. price can reach defined target.

Redington (India) Ltd., incorporated in the year 1961, is a Mid Cap company (having a market cap of Rs 10905.35 Crore) operating in IT - Hardware sector.

Redington (India) Ltd. key Products/Revenue Segments include Computer Hardware, Sale of services and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 16828.32 Crore, down -2.86 % from last quarter Total Income of Rs 17324.44 Crore and up 24.89 % from last year same quarter Total Income of Rs 13474.00 Crore. Company reported net profit after tax of Rs 326.34 Crore in latest quarter.

Investment Rationale
The EPS estimates increase by 4.4%/3.6% for FY23/24E led by slight increase in revenue and margin estimates for FY23/24. It expects EBIT margin to be ~2.4% for FY23/24 lower than 2.6% for FY22 as benefit of lower discounts given to customers will fade away as supply shortages ease off, but higher than ~1.8% pre-covid, due to increasing share of Enterprise IT and operational improvements. In the long term, as high margin cloud, solar products and logistics services business scale up, it will also aid margins. It continues to value Redington on 10x on FY24 EPS of Rs 16.7 to arrive at revised TP of Rs 167 (earlier: 162). Currently, Redington trades at 7.9x/7.6x on FY23/24E EPS of Rs16.1/Rs.16.7 respectively with Revenue CAGR of 10.9% and low 1.1% EPS CAGR over FY22-24E.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of 30-Jun-2022, while FIIs owned 38.74 per cent, DIIs 16.51 per cent.