Buy Redington; target of Rs 87: Firstcall Research

Firstcall Research is bullish on Redington (India) and has recommended buy rating on the stock with a target of Rs 87 in its June 30, 2012 research report.

“Redington established in 1993 is today positioned as one of the leading Supply Chain service provider in IT, Telecom, Consumer Electronics & Home Appliances Industries. With its corporate office in Chennai, it has 49 Branch offices, 48 warehouses and 46 service centers across India. A team comprising of over 1100 highly skilled and committed professionals helps the Company deliver its products and services to every corner of the country. The team is supported by a robust IT & Communication infrastructure connecting 115 physical locations of the company and a state of the art ERP and e-commerce back bone. Redington has built its business on very strong ethical and commercial fundamentals which has not only helped it to consistently exceed the industry growth rate, but has also enabled to firmly establish it as the "partner of choice" with most of its vendors and business partners. A compounded annual growth rate of more than 50% over the past 15 years. underlining the very strong foundation and prudent practices on which the company's business practices have been built.”

“Redington India Ltd has reported net profit of Rs 1020.90 million for the quarter ended on March.31, 2012 as against 762.20 million in the same quarter last year, an increase of 33.94%. It has reported net sales of Rs 55151.60 million for the quarter ended on March.31, 2012 as against Rs 52067.40 million in the same quarter last year, a rise of 5.92%. Total income grew by 6.00% to Rs 55279.10 million from Rs.52149.60 million in the same quarter last year. During the quarter, it reported earnings of Rs 2.56 a share.”

“At the current market price of Rs.77.10, the stock is trading at 8.75 x FY13E and 7.59 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.8.81 and Rs.10.16 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 20% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 3.03 x for FY13E and 3.07 x for FY14E. Price to Book Value of the stock is expected to be at 1.78 x and 1.41 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 87 for medium to long term investment,” says Firstcall Research report.   

Bodies Corporate holding more than 50% in Indian cos

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