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India Equity Research Reports, IPO and Stock News
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Results were above expectations
In Q1FY12, total income grew by 47% YoY and down by 4.6% QoQ at Rs.5,202 crs. EBIDTA stood at Rs 138 crs with 2.66% margins.PAT at Rs.61.6 crs was up 29% YoY and down 19% QoQ during the quarter. Growth of 39% YoY in India business and addition from Arena facilated the revenue growth.
Growth in non-IT products
Blackberry continued to post robust 30% YoY sales. During the quarter, India sales grew mainly backed by the sales of Blackberry, corporate refresh cycle and IT spend in hardware.
Arena continue to grow
Arena business grew by 35% YoY at USD 135mn. Operating margins improved by 3%, however the PAT margins remained under pressure. The management attributed this to the devaluation of Turkish lira as against dollar and change in local retailer’s model in Turkey.
Overseas Business to ease
The overseas business has seen slow growth over a couple of quarters. This was mainly due to constraints in the supply situation of some products. However, this situation is expected to ease going forward.
Valuation & Recommendations
Redington has very well placed itself in the distribution of IT and non-IT products. Its competency could be recalled from its ability to face challenges like penetrating in the Middle East geographies and increasing the margin credit from HP (due in the coming months).The outlook for FY12 remains positive on the back of e-governance spending in India and non-IT business growing on the back of Blackberry sales. We expect the company’s revenues to grow at a CAGR of 16.9% during FY11-FY13. At CMP of Rs. 95.7, the stock is trading at 13x of its FY12E EPS. We reiterate our target price of Rs. 104 based on our estimated EPS of Rs.7.4 for FY 12E and P/E target multiple of 14x. We recommend a Hold on the stock, expecting good results in the coming quarters which can see an upward revision of estimates for the stock.
Performance Highlights Redington reported 4.6% QoQ decline in net sales to Rs 5,199 crs in Q1 FY12 from Rs 5,449.6 Crs in Q4 FY11. This was on account of constrained supply situation of products. However, it posted 47% jump on a YoY basis boosted by momentum in India business specially from the non-IT front, contribution from ARENA and the recovery in the Middle East business. EBITDA for the quarter fell by 4.3% QoQ and rose by 50.4% YoY to Rs 138.2 crs due to lower revenues. EBITDA Margins declined by 29 bps QoQ and marginally rose by 5 bps to 2.7% in Q1FY12. Net profit for the quarter stood at Rs 61.6 Crs Vs Rs 76.21 Crs in Q4 FY11 and Rs 47.8 crs in Q1FY11 on the back of higher interest costs. Basic EPS for Q1 FY12 stood at Rs 1.5
Blackberry Opportunity
Blackberry sales continue to grow at a 30% YoY growth. Currently, it is the sole distributor of blackberry phones in India. The non-IT revenues would continue to grow at double digit growth rate on the back of further Blackberry penetration in the Indian market. During the quarter the non-IT sales grew by 80% YoY.
Recent Updates HUAWEI Device Co. Ltd. appointed Redington (India) as an authorised distributor for their smart device range of products powered by Android viz. Mobile broad band, Handset- 3G- Smart Phone & Tablet, etc. in South India, East India and Large Format Retails chain across India.This new sign-up is expected to give a boost to the Company's presence in the telecom vertical with a focus on the Android mobile market.
After having signed Redington (India) for distribution of their BlackBerry Handsets, Software Licenses and updates, Research-in-Motion Singapore Pte Limited (RIM), RIM has now appointed it as National Distributor for their Blackberry PlayBook which is a powerful and innovative product in the growing tablet market place. This new sign-up would enable the company to improve its foothold in the Tablet business of the Consumer and Digital Lifestyle Products segment.
Valuation & Recommendation
Redington has very well placed itself in the distribution of IT and non-IT products. Its competency could be recalled from its ability to face challenges like penetrating in the Middle East geographies and increasing the margin credit from HP (due in the coming months).The outlook for FY12 remains positive on the back of e-governance spending in India and non-IT business growing on the back of Blackberry sales.
We expect the company’s revenues to grow at a CAGR of 16.9% during FY11-FY13. At CMP of Rs. 95.7, the stock is trading at 13x of its FY12E EPS. We reiterate our target price of Rs. 104 based on our estimated EPS of Rs.7.4 for FY 12E and P/E target multiple of 14x. We recommend a Hold on the stock, expecting good results in the coming quarters which can see an upward revision of estimates for the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Results were above expectations
In Q1FY12, total income grew by 47% YoY and down by 4.6% QoQ at Rs.5,202 crs. EBIDTA stood at Rs 138 crs with 2.66% margins.PAT at Rs.61.6 crs was up 29% YoY and down 19% QoQ during the quarter. Growth of 39% YoY in India business and addition from Arena facilated the revenue growth.
Growth in non-IT products
Blackberry continued to post robust 30% YoY sales. During the quarter, India sales grew mainly backed by the sales of Blackberry, corporate refresh cycle and IT spend in hardware.
Arena continue to grow
Arena business grew by 35% YoY at USD 135mn. Operating margins improved by 3%, however the PAT margins remained under pressure. The management attributed this to the devaluation of Turkish lira as against dollar and change in local retailer’s model in Turkey.
Overseas Business to ease
The overseas business has seen slow growth over a couple of quarters. This was mainly due to constraints in the supply situation of some products. However, this situation is expected to ease going forward.
Valuation & Recommendations
Redington has very well placed itself in the distribution of IT and non-IT products. Its competency could be recalled from its ability to face challenges like penetrating in the Middle East geographies and increasing the margin credit from HP (due in the coming months).The outlook for FY12 remains positive on the back of e-governance spending in India and non-IT business growing on the back of Blackberry sales. We expect the company’s revenues to grow at a CAGR of 16.9% during FY11-FY13. At CMP of Rs. 95.7, the stock is trading at 13x of its FY12E EPS. We reiterate our target price of Rs. 104 based on our estimated EPS of Rs.7.4 for FY 12E and P/E target multiple of 14x. We recommend a Hold on the stock, expecting good results in the coming quarters which can see an upward revision of estimates for the stock.
Performance Highlights Redington reported 4.6% QoQ decline in net sales to Rs 5,199 crs in Q1 FY12 from Rs 5,449.6 Crs in Q4 FY11. This was on account of constrained supply situation of products. However, it posted 47% jump on a YoY basis boosted by momentum in India business specially from the non-IT front, contribution from ARENA and the recovery in the Middle East business. EBITDA for the quarter fell by 4.3% QoQ and rose by 50.4% YoY to Rs 138.2 crs due to lower revenues. EBITDA Margins declined by 29 bps QoQ and marginally rose by 5 bps to 2.7% in Q1FY12. Net profit for the quarter stood at Rs 61.6 Crs Vs Rs 76.21 Crs in Q4 FY11 and Rs 47.8 crs in Q1FY11 on the back of higher interest costs. Basic EPS for Q1 FY12 stood at Rs 1.5
Blackberry Opportunity
Blackberry sales continue to grow at a 30% YoY growth. Currently, it is the sole distributor of blackberry phones in India. The non-IT revenues would continue to grow at double digit growth rate on the back of further Blackberry penetration in the Indian market. During the quarter the non-IT sales grew by 80% YoY.
Recent Updates HUAWEI Device Co. Ltd. appointed Redington (India) as an authorised distributor for their smart device range of products powered by Android viz. Mobile broad band, Handset- 3G- Smart Phone & Tablet, etc. in South India, East India and Large Format Retails chain across India.This new sign-up is expected to give a boost to the Company's presence in the telecom vertical with a focus on the Android mobile market.
After having signed Redington (India) for distribution of their BlackBerry Handsets, Software Licenses and updates, Research-in-Motion Singapore Pte Limited (RIM), RIM has now appointed it as National Distributor for their Blackberry PlayBook which is a powerful and innovative product in the growing tablet market place. This new sign-up would enable the company to improve its foothold in the Tablet business of the Consumer and Digital Lifestyle Products segment.
Valuation & Recommendation
Redington has very well placed itself in the distribution of IT and non-IT products. Its competency could be recalled from its ability to face challenges like penetrating in the Middle East geographies and increasing the margin credit from HP (due in the coming months).The outlook for FY12 remains positive on the back of e-governance spending in India and non-IT business growing on the back of Blackberry sales.
We expect the company’s revenues to grow at a CAGR of 16.9% during FY11-FY13. At CMP of Rs. 95.7, the stock is trading at 13x of its FY12E EPS. We reiterate our target price of Rs. 104 based on our estimated EPS of Rs.7.4 for FY 12E and P/E target multiple of 14x. We recommend a Hold on the stock, expecting good results in the coming quarters which can see an upward revision of estimates for the stock.
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