Summary
Redington Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 05, 2026 11:00 AM
Event Participants
Executives 3 Palak Agrawal (GM, IR), S.V. Krishnan (Finance Director), V.S. Hariharan (MD and Group CEO)
Analysts 6 Aejas Lakhani, Madhur Rathi, Nitin Padmanabhan, Sahil Doshi, Samay Sabnis, Tarang, Vinay Menon
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹30,959 crores | +16% YoY; Best-ever quarterly revenue driven by India (+25%) and UAE (+19%). |
| PAT | ₹436 crores | +9% YoY; Overall PAT margin at 1.41%. |
| Net Debt | ₹ [Not specified] | -₹1,000 crores YoY; Significant reduction in debt levels despite 22% business growth. |
| Working Capital | 28 days | -6 days YoY; Historic low outside of COVID period due to efficient inventory and AR management. |
| ROCE | 22.1% | Stable performance; Management targets a sustainable range of 18-20%. |
| SISA Revenue | [Included in India] | +24% YoY; Strong performance in India distribution offset by one-offs in South Asia. |
| Arena Loss | ₹22 crores | Significant improvement from previous losses; reflects impact of Vodafone contract divestment and Lira exposure reduction. |
| Finance Cost | ₹33 crores | -53.5% YoY; Drastic reduction in factoring costs (₹33cr vs ₹71cr last year). |
Geographic & Segment Commentary
- India: Revenue grew 25% YoY, showing strong resilience across all segments. Strategic focus on upcountry initiatives and direct-to-retail execution in the premium mobility segment drove results.
- Middle East & Africa: UAE grew 19% while GCCL (Levant/others) surged 29%. Africa grew 14% with particular success in the Software Solutions Group (SSG).
- Mobility: Grew 15% YoY, contributing 35% of total revenue. Growth was led by premium segment demand and Apple performance, though offset by the exit from the Connect business in Turkey.
- End Point Solutions (PC): Grew 21% YoY, contributing 32% of revenue. Growth was partially driven by component shortages/price increases and strong AI PC penetration (28% of India commercial PC revenue).
- Software Solutions Group (SSG): Grew 40% YoY, now 18% of total revenue. This “Golden Trinity” of Cloud, Software, and Cybersecurity remains the primary margin and growth driver.
Company-Specific & Strategic Commentary
- AI Capability Center: Established a new center in Chennai to develop internal and external AI use cases and an “AI Agentic catalog” for ISVs.
- CloudQuarks Platform: Rolling out an enhanced digital platform with advanced analytics for customer life cycle management and cloud resale.
- Data Center Focus: Strategizing to capture opportunities from new tax holidays for foreign data centers, focusing on power/cooling solutions and colocation demand.
- Turkey Turnaround (Arena): Successfully divested from the Vodafone contract and local currency business to reduce interest costs; revenue in Turkey expected to drop 50% as the business shifts to core IT.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Arena Break-even | FY 2027 | Expected return to healthy levels following divestment of high-interest Lira business. |
| ROCE | 18% - 20% | Management views the current 22.1% as an upside, with 16% as the hard floor. |
| SSG Growth | 40%+ Growth | Sustained momentum expected across all markets (India, MEA, SE Asia). |
| PC Volumes | Cautious Outlook | Volume pressure expected over next 12-18 months due to component manufacturing ramps and price hikes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Supply Chain/Chip Shortage | Management noted that component shortages are driving price hikes (up to 20%), which may dampen consumer demand and volume in the PC segment. |
| Geopolitical/Macro (MENA) | Saudi Arabia has reprioritized certain Vision 2030 projects, leading to a slight deceleration in market “heat” compared to previous years. |
| Asset Quality | Bangladesh trade receivables required a $1.4 million charge due to collectability issues, highlighting regional credit risks. |
Q&A Highlights
Global Data Center Opportunity
- Question: Does the government mandate for local resellers for global data center players open a large opportunity? (Nitin Padmanabhan)
- Answer: Early days, but Redington is reaching out to hyperscalers to take over direct corporate business if it benefits them financially (V.S. Hariharan).
Working Capital Sustainability
- Question: Is the 28-day working capital cycle sustainable? (Sarath Reddy)
- Answer: The normal steady-state range is 35-40 days. Current lows are helped by Mobility mix and high intensity in AR management, but data center deals may require more capital (S.V. Krishnan).
TSG Margin Compression
- Question: Why did TSG revenue decline while other segments grew? (Vinay Menon/Tarang)
- Answer: Decline of 7% was due to timing of large deals and a structural shift from on-prem to cloud. Heavy competition and brand-level margin compression are impacting gross margins in this segment (S.V. Krishnan).
Arena Exit Costs
- Question: Are there more one-off costs expected from the Turkey restructuring? (Sahil Doshi)
- Answer: Some exit costs occurred this quarter and some will flow into Q4. By April 2026, the company should be through the transition to a steady-state core IT business (S.V. Krishnan).
Key Takeaway
Redington delivered a record-breaking Q3 FY26 with revenue of ₹30,959 crores (+16% YoY) and PAT of ₹436 crores (+9% YoY), underpinned by a historic low working capital cycle of 28 days. Growth was primarily fueled by the India market (+25%) and the Software Solutions Group (SSG), which surged 40% to comprise 18% of total revenue. Strategically, the company is pivoting from traditional distribution to “orchestration,” evidenced by investments in AI Centers of Excellence and the CloudQuarks platform. While the restructuring of the Turkey subsidiary (Arena) resulted in a ₹22 crore loss, interest costs reduced significantly, and a move toward break-even is projected for FY27. Looking ahead, management remains cautious on PC volumes due to chip-shortage-induced price hikes but remains confident in maintaining an 18-20% ROCE as the high-margin SSG segment scales.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: