Redington shares rally 12% on strong Q2 results; Analyst sees stock at ₹370

Shares of Redington Ltd. surged over 12% on Thursday, November 6, after the company reported strong year-on-year growth and a sharp sequential improvement in performance. Margins remained stable at around 2%.

The Software Solutions Group (SSG) posted a 48% year-on-year increase, driven by sustained momentum in cloud, software, and cybersecurity. The Mobility Solutions Group (MSG) grew 18% year-on-year, driven by higher demand in the premium smartphone segment, new product introductions, and robust execution under its Direct-to-Retail model.

The Technology Solutions Group (TSG) saw a 9% year-on-year rise, aided by stronger enterprise demand and large-deal execution both in India and overseas. The Electronics Solutions Group (ESG) grew 11% year-on-year, led by rising PC demand in India amid accelerating AI PC penetration.

In its past commentary, the company guided for long-term margins of 2.3-2.5% EBITDA (including other income) and a 1.3% PAT margin.

Brokerage firm Monarch Networth Capital has initiated coverage on Redington with a 'Buy' rating and a price target of ₹370.

The brokerage described Redington as one of India's most diversified technology distributors, spanning mobility, cloud, software, and ICT solutions, with partnerships with global majors such as Apple, HP, Dell, Lenovo, and Samsung.

Monarch said that the company is well positioned to benefit from India's ongoing digital and cloud transformation.

The high-margin Software Solutions and Cloud segments are expected to witness 3x growth over the next four to five years. Rising demand for premium smartphones (from brands like Apple, Samsung, Motorola, and Google) and an expected PC refresh cycle from H2FY26 are also set to drive strong growth across the mobility and electronics segments.

Expansion into over 300 cities has further strengthened Redington's distribution network. Its 40,000+ partner ecosystem provides unmatched market reach, while a disciplined approach to working capital continues to support robust cash flows and a healthy 0.3x debt-to-equity ratio.

The brokerage added that with ongoing investments in cloud marketplaces, AI integration, and sustainability initiatives such as solar energy and device refurbishment, Redington is steadily evolving into a solutions-driven enterprise.

Key risks, according to Monarch, include vendor concentration (notably Apple, HP, AWS, and Microsoft), channel risk, working capital intensity, and foreign exchange/geopolitical exposure in MEA and ASEAN markets.

Factoring in the company's performance outlook, the brokerage estimates 14.0%, 18.6%, and 22.1% revenue, EBITDA, and adjusted PAT CAGR, respectively, over FY25-28E.