Motilal Oswal is bullish on Redington (India) and has recommended buy rating on the stock with a target of Rs 102 in its February 2, 2013 research report.
“REDI's 3QFY13 results were marginally below expectations, with revenue up 11% YoY at INR61.2b (v/s our estimate of INR63.5b), EBITDA up 14% YoY at INR1.7b (v/s our estimate of INR1.8b) and net profit up 21% YoY at INR819m (v/s our estimate of INR824m). Domestic revenue grew 15% YoY and 6% QoQ to INR28.2b, while international revenue was up 8% YoY and 2% QoQ at INR33.1b. Domestic revenue was boosted by strong growth in the non-IT segment, primarily due to Apple iPhone launch.”
“The management moderated growth expectations and noted that consumer demand outlook remains weak; the anticipated recovery is not yet visible. Nonetheless, the management was optimistic of de-freezing of government project demand. It guided for IT growth rate of ~10% for the domestic and international markets. It even lowered its Apple iPhone guidance for FY13 from INR11b to INR8b. In 3QFY13, REDI generated FCF of ~INR2.7b (~INR2.3b for 9MFY13), primarily due to lower working capital requirements, on favorable working capital terms in case of Apple iPhone sales. REDI's net debt-equity stood at ~1x.”
“REDI is the leading IT SCM player in India and the Middle East and is a strategic partner to the world's leading technology companies. We expect REDI to post revenue CAGR of 17% and net profit CAGR of ~20% over FY12-15. Implementation of GST would unveil and increase new opportunities for the company, particularly in the non-IT vertical. We are revising our revenue estimates by -1.3%/-2.4%/-2.2% for FY13/FY14/FY15 and PAT estimates by -3.3%/-1.4%/-0.9% for FY13/FY14/FY15. REDI trades at 7.6x/ 6.3x its FY14/FY15E earnings and EV of 6.5x/5.7x FY14/FY15E EBITDA. We maintain Buy with a target price of INR102 (based on intrinsic P/E of 8x FY15E) - an upside of ~17%,” says Motilal Oswal research report.
FIIs holding more than 30% in Indian cos
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