REDINGTON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.1

📊 Financials: Redington has reported strong profitability with quarterly PAT of ₹532 Cr vs ₹200 Cr previously, though profit variation (-14.0%) indicates some volatility. EPS at ₹17.9 supports earnings visibility. ROE at 35.0% and ROCE at 32.6% reflect excellent capital efficiency. Debt-to-equity ratio of 0.30 shows moderate leverage, well within manageable levels. Dividend yield of 2.55% provides attractive income support.

💹 Valuation: Current P/E of 15.1 is significantly below industry PE of 32.7, suggesting undervaluation. Book value ₹61.3 vs CMP ₹272 implies a fair P/B multiple (~4.4x). PEG ratio of 0.97 highlights valuation aligned with earnings growth. Intrinsic value appears higher than CMP, offering margin of safety.

💻 Business Model: Redington operates as a leading IT products distributor, with strong presence in hardware, software, and cloud solutions. Competitive advantage lies in its wide distribution network, vendor partnerships, and diversified product portfolio. Risks include margin pressures, currency fluctuations, and dependence on global IT demand cycles.

📈 Entry Zone: Technically, support lies near ₹250–₹260 (DMA 200 zone). CMP at ₹272 is close to DMA 50 (₹277), suggesting consolidation. Entry is favorable near ₹250–₹260 for margin of safety.

📌 Long-term Holding: Strong fundamentals, undervaluation, and healthy returns make Redington attractive for long-term holding. Accumulation on dips is recommended, with potential for compounding given IT sector growth.

Positive

• 📊 Healthy ROE (35.0%) and ROCE (32.6%) reflect excellent capital efficiency.
• 📈 EPS of ₹17.9 supports earnings visibility.
• 💰 Attractive dividend yield of 2.55% provides steady income.
• 💻 Strong distribution network and diversified IT product portfolio.

Limitation

• ⚠️ Quarterly profit variation (-14.0%) signals earnings volatility.
• 📉 CMP below recent highs (₹335) indicates limited near-term upside.
• 💸 Currency fluctuations and margin pressures may impact profitability.

Company Negative News

• 📉 Decline in FII holdings (-0.77%) signals reduced foreign investor confidence.

Company Positive News

• 📈 Increase in DII holdings (+0.32%) shows domestic institutional support.

Industry

• 💻 IT distribution sector trades at industry PE of 32.7, highlighting Redington’s undervaluation.
• 📊 Industry growth supported by rising demand for hardware, software, and cloud solutions.

Conclusion

⚖️ Redington is fundamentally strong, undervalued, and offers healthy returns with attractive dividend yield. Entry is advisable near ₹250–₹260 support zones. Long-term holding is justified given strong fundamentals and IT sector growth potential.

Would you like me to extend this with a peer benchmarking overlay against IT distributors like Ingram Micro and Savex Technologies to highlight comparative valuation and efficiency?