Redington’s 2QFY18 results were above our estimates with a beat on revenues, EBIDTA and PAT. Revenues at Rs105.4bn were up 8.4% YoY and above our estimates (Rs101bn). Revenues from India came at Rs39.19bn up 6% YoY as company recovered from GST led destocking which has hurt growth in 1QFY18. Management guided that the worst from GST led headwinds are behind and sees improvement in revenue growth trajectory in India in 2HFY18. Revenues from Overseas geographies came at Rs66.2bn up 9.6% YoY. Consolidated EBIDTA margin at 1.88% was up 2bps QoQ and inline with our estimates.

Led by 2Q revenue beat, They upgrade our revenue growth assumption and now model Redington revenues to grow by 6.4/11% for FY18 /FY19E (vs 4.4/11% modelled earlier). We retain our EPS estimates at Rs 12.5/14.5/sh for FY18/ FY19E. Stock trades at 11.1x FY19E EPS. We have recently initiated coverage on Redington.

Retain BUY.

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 07 Nov 2017, 09:34 AM