Proxy play? Google-Apple to drive growth for this Indian company; brokerages see more upside

New Delhi: Redington India has had investors' attention since Apple announced the iPhone-14 series and strategic partnership with Google Cloud India.

Redington India recently announced its collaboration with Google Cloud, where it will drive the distribution and adoption of Google Workspace and Google Cloud with SMBs, education and public sector, mid-market, and enterprise segments.

The company is the sole distributor of Apple products in India and markets its presence in more than three dozen countries, including the Middle East and Africa regions.

Shares of Redington have advanced more than 35 per cent in the three months, but the stock saw some profit-booking on Friday and settled at Rs 152.90, about 3 per cent lower.

However, brokerage firms remain positive on the counter following its attractive valuations, wide distribution network, and presence in multiple countries.

The company has a large opportunity in the cloud business and is investing in building capabilities accordingly, and change in GTM should not have much of an impact in the longer run, considering a diversified brand portfolio and geographical presence, said Edelweiss Securities.

Redington enabled direct-to-retail tech platform, which will further its reach and scalability, and its shared-services unit is realising economies of scale, thus parking costs, the brokerage added with a target price of Rs 203, signaling a 33 per cent upside in the stock.

Other brokerages see an increase in demand as work-from-home is moving back to onsite mode, leading to higher demand for IT hardware from corporates and organizations.

We continue to believe that Covid ‘inspired’ urgency for digitalisation across work/personal use, and the expected adoption of Cloud/5G should translate into a healthy ICT market in the years ahead, said DAM Capital in its note.

"Given growth opportunities, potential optionalities, we believe the risk-reward remains firmly in favour of the investor despite the recent run-up in stock price," it added with a buy tag and a target price of Rs 192 intact on the stock.

Dam Capitals flagged two risks for the counter, including rising working capital vis-à-vis growth, which could mean higher interest costs and hence weaker earnings, and cloud/MS investments remain suboptimal, dragging margins lower.

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