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Stocks

Redington Reports Flat Results, Headwinds From Nigeria and Turkey Operations

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Redington Logo

Redington – the supplier of “gadgets” – technology products, in wholesale, in India and overseas. They distribute products from Dell, Apple, Samsung, Lenovo, HP and others.
Witnessing a strong sales performance both the domestic and international market with a significant reduction in working capital (reduced from 58 days last year to 46 days – due to substantial reduction in inventory and good collection) leading to positive free cash flow, Redington reported Consolidated Revenue from Operations stood at Rs. 9,725.42 crore against Rs. 8,380.69 crore.

  • PAT stood at Rs. 100.45 crore against Rs. 97.86 crore.
  • EPS stood at Rs. 2.51 against Rs. 2.43

Revenue from Services segment grew to 28% from 20% previously (Q2FY16) while a subsequent contraction mirrored in the IT business. The company did notice one-off events in both Nigeria and Turkey. Translation loss of $2.4 million was realized due to exchange rate depreciation in Nigeria and currency depreciated due to geopolitical conflicts impacted the earnings expected from the Turkey operations (on the back of 74% income tax rate).
The Apple iPhone portfolio has seen the same intense velocity that comes for Apple products (the company has seen a higher response on iPhone 7 and 7 Plus than the response that it has had on iPhone 6S but remember that Apple is a low margin business for the company) while on the Microsoft portfolio, the company is looking for the churn that comes from the next version of Windows.
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The Non-IT growth outside India stood at 141% growth on the back of the Apple contract for iPhone in UAE (though Apple introduces new products in October while Q4 quarter (Jul-Sep) is not the best quarter. PCs and printers registered a growth of 18% possibly due to the opportunities to sell to E-Commerce companies on the back of Diwali and Big Billion Day sales etc.
While Chinese smartphones are denting the margins for home grown companies such as Micromax and Lava, Redington has been able to bag the engagement for being an offline distributor (currently has 12 to 14 brands and from Apple to Asus to erstwhile Blackberry) for Xiaomi as well as LeEco including other Chinese vendors. Recently the company has been appointed as the national distributor for Google Pixel phones and the company has been provided with limited quantities right now to seegage the initial demand from the market.