Shares of Redington surged more than 12 per cent on Thursday after the technology distribution company reported robust year-on-year growth and a sharp sequential improvement in its second-quarter performance. Operating margins remained stable at around 2 per cent.
The Software Solutions Group (SSG) led the gains with a 48 per cent year-on-year increase, supported by strong momentum in cloud, software, and cybersecurity offerings. The Mobility Solutions Group (MSG) posted 18 per cent growth, fuelled by demand in the premium smartphone segment, new product launches, and solid execution under the company's Direct-to-Retail model.
Meanwhile, the Technology Solutions Group (TSG) registered a 9 per cent increase in revenue, driven by enterprise demand and large-deal execution in both domestic and international markets. The Electronics Solutions Group (ESG) grew 11 per cent year-on-year, aided by higher PC demand in India amid accelerating AI PC adoption.
In its outlook, Redington reiterated its long-term EBITDA margin guidance of 2.3-2.5 per cent (including other income) and a PAT margin of 1.3 per cent.
Brokerage Monarch Networth Capital initiated coverage on the stock with a 'Buy' rating and a price target of Rs 370, calling Redington one of India's most diversified technology distributors, spanning mobility, cloud, software, and ICT solutions, with partnerships with major global players such as Apple, HP, Dell, Lenovo, and Samsung.
The brokerage said Redington is well positioned to capitalise on India's ongoing digital and cloud transformation, with high-margin segments like Software Solutions and Cloud expected to grow threefold over the next four to five years. Rising demand for premium smartphones and an upcoming PC refresh cycle in H2FY26 are also likely to support growth across its key business lines.
Redington's expansion into more than 300 cities, coupled with its 40,000+ partner network, has strengthened its market reach, while its disciplined working capital management continues to underpin strong cash flows and a healthy 0.3 times debt-to-equity ratio.
Monarch also noted Redington's ongoing investments in cloud marketplaces, AI integration, and sustainability initiatives, including solar energy and device refurbishment, positioning it as a solutions-driven enterprise.
However, the brokerage flagged risks such as vendor concentration (notably Apple, HP, AWS, and Microsoft), channel dependency, working capital intensity, and geopolitical exposure in the Middle East and ASEAN markets.
Factoring in the company's growth prospects, Monarch forecasts revenue, EBITDA, and adjusted PAT CAGR of 14.0 per cent, 18.6 per cent, and 22.1 per cent, respectively, over FY25-FY28.