Redington (India) is a growth stock to keep your eyes on

06-06-2014 • About Redington (India) ($REDINGTON) • By InTwits

Redington (India) is a growth stock in Comm.Trading & Distribution industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

Redington (India) showed fast growth in the last financial year. The company's revenue surged on 15.6% in FY2014. Together with revenue growth Redington (India) also managed to keep EBITDA growth. EBITDA grew 7.68% for the same period.

If we look for the longer period Redington (India) showed fast revenue growth of 17.0% from FY2011 to FY2014 annually. EBITDA surged on 14.9% from FY2011 to FY2014 annually.

Redington (India) ($REDINGTON) financials for the last 5 years

mln. INR	FY2010	FY2011	FY2012	FY2013	FY2014
Revenue	548,844	174,585	211,930	241,647	279,449
Revenue growth, %		-68.2%	21.4%	14.0%	15.6%
Gross margin, %	5.27%	5.37%
SG&A, %
EBITDA	3,473	4,564	6,046	6,434	6,928
EBITDA growth, %		31.4%	32.5%	6.4%	7.7%
EBITDA margin, %	0.633%	2.61%	2.85%	2.66%	2.48%
Net Income	1,843	2,260	2,927	3,231	3,366
Net Income margin, %	0.336%	1.29%	1.38%	1.34%	1.20%

CAPEX	349	564	521	1,574	569
CAPEX/Revenue, %	0.0635%	0.323%	0.246%	0.652%	0.204%
Debt	11,486	15,897	20,603	21,501	16,652
Cash	5,826	4,806	4,708	4,743	4,751
Net Debt/EBITDA	1.6x	2.4x	2.6x	2.6x	1.7x

ROIC, %	13.8%	15.5%	17.2%	16.0%	16.3%
ROE, %	17.7%	20.0%	23.3%	21.8%	18.4%

Profitability and return on investment

EBITDA margin declined slightly from 2.70% in FY2013 to 2.50% in FY2014. If we look for the longer period the company's EBITDA margin decreased slightly on 0.1000 pp from 2.60% in FY2011 to 2.50% in FY2014.

Redington (India) shows attractive ROIC at 16.3% for the last 12 months which assumes stable development model. During the last three years it increased - it was 15.5% in FY2011. It's average level of ROIC for the last three years was 16.5%.

Net Income margin decreased on 0.1000 pp from 1.30% to 1.20% in FY2014. If we look for the longer period Redington (India) showed decline of 0.1000 pp from 1.30% in FY2011 to 1.20% in FY2014.

Redington (India) operates at ROE of 18.4%. For the last three years the average ROE was 21.2%.

Capital expenditures (CAPEX)

The company's CAPEX/Revenue was 0.204% in FY2014. Redington (India)'s CAPEX/Revenue dropped on 0.120 pp from 0.323% in FY2011 to 0.204% in FY2014. Average CAPEX/Revenue for the last three years was 0.367%.

Leverage (Debt)

The company has medium debt level at 1.7x Net Debt/EBITDA to maintain high growth. If we look for the longer period Redington (India)'s leverage dropped on 0.71x from 2.43x in FY2011 to 1.72x in FY2014.

Valuation vs. comparable companies

The company trades at 7.6x EV/EBITDA which is 52.7% lower than 16.0x Comm.Trading & Distribution industry avearge calculated based on 330 companies. At the end of trading day today Redington (India) traded at 12.0x P/E which is 96.2% lower than 316.8x Comm.Trading & Distribution peer group avearge calculated on the basis of 14 companies.

Peers in Comm.Trading & Distribution

Below you can find Redington (India) benchmarking vs. other companies in Comm.Trading & Distribution industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Risa International ($RISAINTL)		285.4%			4,724.7%
Shri Krishna Prasadam ($SKP)			69.6%	57.3%	1,074.7%
Parker Agrochem Exports ($PARKERAC)		-87.9%	-77.2%	1,542.3%	39.1%
Ennore Coke ($ENNORE)		62.1%	-5.0%	-45.5%	34.0%
Ptl Enterprises ($PTL)		-60.0%	17.9%	12.6%	17.7%

Median (17 companies)		-33.2%	9.1%	11.9%	12.1%
Redington (India) ($REDINGTON)		-68.2%	21.4%	14.0%	15.6%

Top companies by EBITDA margin, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Ptl Enterprises ($PTL)	2.0%	27.6%	26.6%	22.7%	21.6%
Vadilal Enterprises ($VADILENT)	0.8%	1.7%	1.1%	11.5%	0.8%
Cravatex ($CRAVATEX)		12.7%	5.8%	7.4%	7.0%
Maxwell Industries ($MAXWELL)	8.8%	6.7%	9.9%	6.7%	9.0%
Kothari Products ($KOTHARIPRO)	-0.1%	3.3%	5.4%	4.4%	5.9%

Median (17 companies)	1.9%	3.3%	3.1%	2.8%	2.0%
Redington (India) ($REDINGTON)	0.6%	2.6%	2.9%	2.7%	2.5%

Top companies by CAPEX/Revenue, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Maxwell Industries ($MAXWELL)	2.5%	1.2%	0.9%	1.9%	2.4%
Ptl Enterprises ($PTL)	0.7%	1.0%	5.0%	4.5%	2.4%
Kothari Products ($KOTHARIPRO)	0.0%	0.9%	2.5%	0.1%	0.2%
Mmtc ($MMTC)	0.2%	0.1%	0.0%	0.1%	0.1%
Risa International ($RISAINTL)				0.0%	0.0%

Median (5 companies)	0.7%	1.0%	0.9%	0.1%	0.2%
Redington (India) ($REDINGTON)	0.1%	0.3%	0.2%	0.7%	0.2%

Top companies by ROIC, %

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
Kothari Products ($KOTHARIPRO)	-1.4%	7.4%	23.4%	20.0%	28.3%
Ptl Enterprises ($PTL)	0.6%	18.1%	18.5%	19.5%	21.1%
Risa International ($RISAINTL)				-0.2%	14.8%
Bombay Cycle & Motor Agency ($BOMBCYC)	55.6%			15.1%	13.5%
Mmtc ($MMTC)	1.3%	1.0%	0.7%	1.6%	9.7%

Median (41 companies)	2.0%	3.1%	4.8%	5.0%	9.7%
Redington (India) ($REDINGTON)	13.8%	15.5%	17.2%	16.0%	16.3%

Top companies by Net Debt / EBITDA

Top 5
	FY2010	FY2011	FY2012	FY2013	FY2014
N.R.International ($NRINTER)	5.7x	6.7x	5.1x	50.4x
Mmtc ($MMTC)	48.6x	57.1x	48.9x	14.3x	0.5x
Sarda Plywood Industries ($SARDAPLY)	8.9x	3.9x	167.2x	7.4x
Maxwell Industries ($MAXWELL)	2.7x	5.7x	3.7x	5.8x	3.5x
Vipul Dye Chem ($VIPULDYE)		2.9x	3.9x	5.1x	3.9x

Median (29 companies)	2.1x	3.0x	1.6x	2.0x	0.0x
Redington (India) ($REDINGTON)	1.6x	2.4x	2.6x	2.6x	1.7x

Redington (India) stock price chart

Redington (India) financials

mln.	FY2010	FY2011	FY2012

Revenue	548,844	174,585	211,930
EBITDA	3,473	4,564	6,046
Net income	1,843	2,260	2,927
CAPEX	348.7	564.4	521.2
Debt	11,486	15,897	20,603
Cash	5,826	4,806	4,708

About Redington (India)

Redington (India) Limited, together with its subsidiaries, provides end-to-end supply chain solutions for various categories of information technology (IT) products, and consumer and lifestyle products to approximately 100 international brands. The company distributes IT hardware and software products; and consumer and lifestyle products comprising digital lifestyle, smart communications, telecom, consumer electronics, and digital printing products. It also offers hardware support services, such as warranty and post-warranty services through a network of hardware support service centers, including 70 owned service centers and 292 franchise service centers. The hardware support services cover solution design and consulting, technical helpdesk, field engineering support, parts warehousing, forward and reverse logistics, imports and re-exports, and asset recovery. In addition, the company provides end-to-end logistics services ranging from import, warehousing, and stock movement across geographies, to packing/repacking, order processing, and delivery anywhere within its operating footprint. Its warehousing and logistics services include third party logistics, such as forward logistics and reverse logistics, as well as the operation of automated distribution centers and reverse logistics centers. The company has operations in India, the Middle East, Africa, Turkey, Sri Lanka, Bangladesh, and the CIS countries. Redington (India) Limited was incorporated in 1961 and is based in Chennai, India.