At a Glance

Redington just posted its Q1 FY26 results, and it’s like that friend who says, “I’m fine,” while quietly hiding ₹850 Cr of other income in the closet. Revenue hit ₹26,002 Cr (+22% YoY), PAT rose 12% to ₹233 Cr, and margins stayed wafer-thin at 2%. The stock tanked 7.7% to ₹265 because markets don’t like surprises unless they come with a free iPhone.

Introduction

Founded in 1993, Redington is the silent logistics ninja of the IT world – distributing gadgets from Apple to Dell while managing a vast supply chain across India, Middle East, Turkey, and Africa. The company has been a cash cow with steady dividends, but Q1 revealed that profits are still heavily dependent on non-core other income. Investors expected fireworks, got sparklers.

Business Model (WTF Do They Even Do?)

• IT & Mobility Distribution: Laptops, phones, servers – basically everything you buy at full price.
• Cloud & Services: Growing SaaS and cybersecurity solutions.
• Third-Party Logistics: Handles after-sales and warranty services.
• Geography: 80+ countries, with strong presence in emerging markets.

The business is high-volume, low-margin, like selling samosas at a cricket stadium – profits depend on scale.

Financials Overview

Q1 FY26 Snapshot

• Revenue: ₹25,952 Cr (+22% YoY)
• EBITDA: ₹400 Cr (margin 2%)
• PAT: ₹233 Cr (+12% YoY)
• EPS: ₹3.52

FY25 Recap

• Revenue: ₹99,334 Cr
• PAT: ₹1,821 Cr
• ROE: 14.4% | ROCE: 18.9%

Comment: Growth is solid, but profitability hinges on razor-thin margins.

Valuation

1. P/E Method
   • EPS (TTM): ₹20.9
   • Industry P/E: 15–20
   • Fair Value ≈ ₹20.9 × 18 = ₹375
2. EV/EBITDA
   • EV ≈ ₹20,700 Cr
   • EBITDA (TTM): ₹2,058 Cr
   • EV/EBITDA ≈ 10x → ₹350–380
3. DCF (Conservative)
   • Assumes 10% growth → ₹300–360

🎯 Fair Value Range: ₹300 – ₹380
At ₹265, stock trades at a discount, but margins keep investors awake at night.

What’s Cooking – News, Triggers, Drama

• Q1 Growth: Driven by cloud & mobility.
• Other Income: ₹850 Cr last year, raising eyebrows.
• Management Change: New MD & CEO took charge in Feb 2025.
• Regulatory Hiccup: RBI slapped a small FEMA fine – immaterial financially.

Balance Sheet

Remarks: Strong reserves, moderate debt, solid liquidity.

Cash Flow – Sab Number Game Hai

Remarks: Operating cash flow volatile – a risky juggling act.

Ratios – Sexy or Stressy?

Remarks: Solid returns, but margins are thinner than tissue paper.

P&L Breakdown – Show Me the Money

Remarks: Revenue climbing, but profitability swings.

Peer Comparison

Remarks: Best scale in class, reasonable P/E.

Miscellaneous – Shareholding, Promoters

• Promoters: None (institutional-led company)
• FIIs: 62.6% (strong interest)
• DIIs: 16.6%
• Public: 20.7%

Sarcastic Take: FIIs love it like candy – maybe because it distributes Apple products?

EduInvesting Verdict™

Redington delivers consistent growth but runs on ultra-thin margins. The Q1 FY26 PAT increase is positive, yet over-reliance on other income remains a concern. With FIIs holding the majority, the stock’s valuation looks attractive, but margin risks persist.

SWOT Quickie:

• Strengths: Scale, distribution network, cloud growth.
• Weaknesses: Thin margins, profit dependence on other income.
• Opportunities: Rising IT hardware & cloud adoption.
• Threats: Competition, margin compression, regulatory risks.

Final Word: At ₹265, Redington is undervalued relative to its growth. Great for dividend hunters, risky for thrill seekers.

Written by EduInvesting Team | 30 July 2025
SEO Tags: Redington Q1 FY26 Results, IT Distribution Stocks, Cloud Growth, Dividend Stocks