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Monday, March 16, 2009

Redington India Ltd:-A dark horse in the making

Scripscan:Redington India Ltd
Traded in:Nse-bse

Story:Redington India distributes IT products in India, the Middle East and Africa. Besides distribution, Redington (India) also provides support services for IT hardware and mobile phones.The company’s decision to strengthen its distribution capabilities will help it in entering the high margin service segment.Redington is also setting up four automated distribution centres in India and one abroad.The move into high-end repair activities should sustain the growth of high margin service segment.Meanwhile, enhanced infrastructure base would help the company to capitalise on ro-bust domestic market and increase its market share.Its overseas foray has enabled it to report strong business growth in last three years in Middle East, East & West Africa.The company is also planning to venture into North & South Africa, Viet-nam and CIS countries that would ensure additional impetus to growth.Further, to capitalise on the growth opportunities without straining its balance sheet, Redington is also scaling up its NBFC op-erations (100% subsidiary).This would not only im-prove its operational metrics, but also provide the potential to emerge as a profit centre.At the market price of Rs 98, the stock trades at a P/E of 4x and its FY10E.Considering the company's strategy to de-risk business model by scaling up non-IT operations, ramp up in warehousing infrastructure, concentrated efforts to increase share of ‘Value’ business and foray into newer overseas markets,I feel its a scrip worthbuying at present levels.

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