February 14, 2017 / 18:04 IST
Redington’s Q3FY17 revenue/PAT were better than our estimates led by 28% YoY growth in India (39% share) and 18% YoY growth in overseas (61%). The PC business grew higher than the industry in both the geographies. Non-IT maintained growth momentum. Working capital reduced significantly to 43 days (vs. 60 days in Q3FY16).
Outlook
We expect 13%/14% CAGR in revenue/EPS over FY16-18. We reduce our target PE to 10x (vs. 12x earlier) due to languishing growth in IT hardware spends and margin profile which impacts near-term visibility. Redington will continue to grow higher than the industry. Our revised TP stands at Rs 140 (10x FY18E EPS) vs. Rs 167 earlier, which implies 34% upside from CMP of Rs 105. The stock trades at 8.5x/ 7.5xFY17E/FY18E EPS of Rs 12/14.
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