August 01, 2016 / 15:31 IST
Axis Direct's research report on RedingtonRedington’s Q1FY17revenue/PAT was much higher than our estimatesled by 31% YoY growth in overseas operations (61% share) and improved performance in India (up 21% YoY, double-digit growth after 5 quarters).WC improved by 7 days YoY. Generated positive free cash flows (Rs 2 bn+). Momentum to accelerate with improvement in IT spends by corporates/governmentin India, increasing smartphone penetration (Q3/Q4FY17 should see fillip due to new launches by Apple, new vendor signings), higher growth in Proconnectand market share gains in both geographies. We expect margins also to improve in the long term led by increasing share of value business (esp. cloud) and higher.
We expect 13%/14% CAGR in revenue/EPS over FY16-18. Our TP of Rs 195 (14x FY18E EPS) implies 89% upside from CMP of Rs 103. The stock trades at 8.4x/ 7.4xFY17E/FY18E EPS of Rs 12/14.
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