Stock Up 30 Per Cent! This High-Growth AI Stock is Reshuffling Its Portfolio – Big Expansion Ahead?
A well-known IT distributor is cashing in on strategic divestments while expanding into AI and cloud.
Redington Limited has successfully completed the divestment of Paynet Ödeme Hizmetler A.Ş, a wholly owned subsidiary of Arena Bilgisayar, its step-down subsidiary in Turkey. The sale to Iyzi Payment and Electronic Money Services Inc. was finalized on February 13, 2025, for a total consideration of USD 89.29 million, including USD 87 million in base value and USD 2.29 million in net cash. This marks a strategic move to optimize its business focus.
Strong Q3 FY25 Performance
Redington recorded its highest-ever quarterly revenue of Rs 26,764 crore in Q3 FY25, reflecting a 14 per cent year-on-year growth. Net profit rose by 17 per cent to Rs 400 crore, with a PAT margin of 1.5 per cent. The company’s strong execution across business segments and geographies contributed to this profitable growth.
Growth Across Key Markets
The UAE market saw a revenue increase of 26 per cent, while India grew by 18 per cent. Saudi Arabia showed signs of recovery, and Africa continued its growth momentum. Effective inventory and receivables management helped Arena Bilgisayar in Turkey turn a small profit for the quarter.
Expansion in Business Segments
All business segments showed growth in Q3:
Cloud Business: 42 per cent growth, driven by demand for Hyperscaler services and subscription software.
Technology Solutions Group: Grew by 28 per cent, supported by enterprise deals.
Mobility Solutions Group: Increased by 9 per cent, showing steady demand.
End Point Solutions Group: Expanded by 6 per cent.
Working Capital and Cost Management
Redington improved its working capital cycle to 33 days, lowering interest costs and boosting its return on capital employed (ROCE) to 27 per cent. Operating expenses grew by just 1 per cent, reflecting tight cost controls. EBITDA margins remained at the higher end of the expected 2.3-2.5 per cent range.
Future Outlook and Investments
Redington is optimistic about Q4, driven by corporate and government spending, a strong deal backlog, and growth in its cloud and technology segments. The company is entering new markets, including South Africa, Kazakhstan, and Azerbaijan, while investing in cloud and AI to capitalize on long-term trends.
Stock Valuation and Performance
Redington has a market capitalization of Rs 19,048 crore and trades at a P/E ratio of 15.6, significantly lower than the industry average of 30.8. The company has a return on equity (ROE) of 16.8 per cent, with a debt-to-equity ratio of 0.23. The stock has delivered a strong 30 per cent return in the last three months, reflecting investor confidence in its growth trajectory.
Disclaimer: This article is for informational purposes only and not an investment advice.