REDINGTON - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | REDINGTON | Market Cap | 21,616 Cr. | Current Price | 276 ₹ | High / Low | 335 ₹ |
| Stock P/E | 15.4 | Book Value | 61.3 ₹ | Dividend Yield | 2.46 % | ROCE | 32.6 % |
| ROE | 35.0 % | Face Value | 2.00 ₹ | DMA 50 | 271 ₹ | DMA 200 | 264 ₹ |
| Chg in FII Hold | 0.13 % | Chg in DII Hold | 0.31 % | PAT Qtr | 532 Cr. | PAT Prev Qtr | 200 Cr. |
| RSI | 56.6 | MACD | -1.65 | Volume | 15,01,823 | Avg Vol 1Wk | 13,14,415 |
| Low price | 177 ₹ | High price | 335 ₹ | PEG Ratio | 0.99 | Debt to equity | 0.30 |
| 52w Index | 62.9 % | Qtr Profit Var | -14.0 % | EPS | 17.9 ₹ | Industry PE | 32.3 |
📊 Analysis: Redington Ltd. presents strong fundamentals with ROE at 35% and ROCE at 32.6%, reflecting excellent capital efficiency. The stock trades at a P/E of 15.4, well below the industry average of 32.3, suggesting undervaluation. The PEG ratio of 0.99 indicates fair valuation relative to growth. Dividend yield of 2.46% provides steady income, enhancing long-term appeal. EPS of ₹17.9 and consistent profitability support its outlook, though quarterly PAT variation (-14%) raises concerns about earnings stability. Technical indicators (RSI 56.6, MACD slightly negative) suggest consolidation. Ideal entry zone lies between ₹260–₹270, closer to DMA support levels.
📈 Exit Strategy: If already holding, investors should maintain positions for 3–5 years to benefit from strong fundamentals and dividend payouts. Partial profit booking can be considered near ₹320–₹330 (recent highs). Long-term holding is justified given undervaluation, strong ROE/ROCE, and consistent dividend yield.
✅ Positive
- Strong ROE (35%) and ROCE (32.6%) show excellent efficiency.
- P/E of 15.4 is attractive compared to industry average (32.3).
- Dividend yield of 2.46% provides steady income.
- EPS of ₹17.9 reflects consistent profitability.
- Institutional buying (FII +0.13%, DII +0.31%) supports confidence.
⚠️ Limitation
- Quarterly PAT variation (-14%) raises concerns about earnings stability.
- MACD negative indicates weak short-term momentum.
- Stock trading below recent highs (₹335), showing resistance.
📉 Company Negative News
- Quarterly PAT declined compared to previous quarter.
- Short-term technical weakness with MACD negative.
📈 Company Positive News
- EPS growth supports profitability outlook.
- Strong institutional inflows (FII and DII).
- Dividend payouts provide consistent returns to shareholders.
🏭 Industry
- Industry PE at 32.3 suggests sector is moderately valued.
- IT distribution and services sector benefits from digitalization and enterprise demand.
- Global technology adoption trends support long-term growth.
🔎 Conclusion
Redington is a strong candidate for long-term investment, offering undervaluation, excellent ROE/ROCE, and attractive dividends. Ideal entry is around ₹260–₹270 for better risk-adjusted returns. Existing investors should hold for 3–5 years, with partial profit booking near ₹320–₹330. Despite short-term earnings volatility, strong fundamentals and sectoral tailwinds make it a reliable long-term compounder.