Redington Ltd (REDINGTON) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Redington Limited Q2 FY '27 earnings conference call. Before we begin, a brief disclaimer. This conference call will contain forward-looking statements about the company which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involves risk and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. V.S. Hariharan from Redington Limited. Thank you, and over to you, sir.
V.S. Hariharan (Redington Ltd): Thank you so much. Good afternoon and a warm welcome. Thank you for being with us today. This quarter marks another important milestone for Redington. We delivered the strongest quarterly revenue and profit after tax in our history, not in a benign environment, but against a backdrop of geopolitical disruptions,
V.S. Hariharan (Redington Ltd): crisis and continued supply chain complexity. The outcome says as much about the quality of our execution as it does about the strength of demand across our markets. We are in like a multiverse phenomenon. Consolidated revenue for Q2 FY27 was 43,002 crores, up 48% year-on-year. Profit after tax, excluding exceptional items, rose 50% to 581 crores. Excluding Arena, this looks even better. Revenue expanded 54% and profit after tax increased 55% to 657 crores. Growth remained broad and the core business converted that growth into stronger earnings. For the first half of '27, consolidated revenue reached 77,967 crores, a growth of 41% year-on-year, while profit after tax, excluding exceptional items, reached 1,067 crores, growing at 61%. Both are the highest Redington has recorded in any first half.
V.S. Hariharan (Redington Ltd): the line. Yeah, can everyone else mute mute their lines, please? Let's hear some background noise. These results are not built around a single brand, market, or technology cycle. They reflect a portfolio designed for resilience, scale businesses that will generate reach, value businesses that deepen relevance, and emerging capabilities that prepare us for the next phase of technology adoption over the next few years. Let me begin with a little bit more deep dive into our markets. India continued to lead growth with the distribution business growing 67% year-on-year during the quarter while the rest of the world, excluding Arena, grew 38%. Contributions by GCCL, these are the GCC countries and the Levant countries outside of UAE and Saudi, grew 121%. UAE grew 39% and Africa grew 35%. The Middle East grew 41% despite the geopolitical uncertainty. The breadth of this performance demonstrates the relevance of our portfolio across these markets. India benefited from several growth factors working together. Premium mobility continues to be a key play for us in the mobility segment, the smartphone segment, backed by NPIs, higher, and higher PC selling prices in the PC segment, substantial data center wins, and sustained expansion in software, cloud, and security. Our routes to market are also becoming more effective. The direct to retail motion in India, other technology-enabled models are increasing our reach while giving partners a more responsive distribution platform. Across the Middle East and Africa, our teams adopted adapted quickly to the logistics disruption, longer collection cycles, and tighter liquidity. The region nevertheless produced strong growth, particularly in value-led categories. We are encouraged by the opportunity despite the situations in these markets, while remaining deliberate about credit, inventory, and cash discipline. Now turning to our business engines and giving a little bit of narrative around that, every vertical grew very good double-digit during the quarter. More importantly, the mix of growth shows that Redington is participating across the full technology stack, from devices to data centers, and from cloud consumptions to software-led solutions. Mobility grew 40% and accounted for 34% of the consolidated revenue. As I mentioned before, premiumization, especially in India, new product launches across the world, and select selective price increases supported the quarter. SISA geography grew 70% with healthy momentum across both Apple and Android. In the rest of the world, mobility grew 34% excluding Arena. End Point Solutions grew 38% and represented 30% of revenue. Higher average selling prices were the principal driver, supported by a sequential increase in commercial PC volumes. The business delivered its highest quarterly revenue to date, demonstrating the device demand remains relevant even as the market shifts towards higher performance and AI-capable PCs. On the Technology Solutions Group, it was a standout performance this quarter. Revenue increased 91%, taking TSG to 20% of the consolidated mix. Server, storage, and networking, all contributed. However, the AI servers, the GPUs with richer configurations and dramatically higher ASPs, in many cases 4x,
V.S. Hariharan (Redington Ltd): growth. Large deals exceeded 3,800 crores and accounted for roughly 9% of the group's revenue. A good chunk of the large deals in India came from data centers. Excluding these large deals, TSG grew by 33%, giving us confidence in the depth of the underlying opportunity. Software Solutions Group grew 39% and contributed to 15% of revenue. All SBUs grew under SSG, with strong growth in cyber security and cloud. Cyber security sprung back very nicely with all the efforts and focus in the last few quarters. We are widening our access to leading OEMs and brands and hyperscalers, taking existing partnership into new market and combining products into more complete customer solutions. The objective is straightforward, moving from fulfillment towards orchestration and earn a larger role in the customer's technology agenda. Our professional services business registered strong growth with many enterprise and SMB wins. Our new CloudQuarks 2.0 has been rolled out to all of Middle East Africa and cloud life cycle management tools such as TrackMyCloud and RionX has become has found better adoption by partners, and these will hold a lot of good stead in terms of stickiness to customers and partners to our cloud platform. AI is becoming a common thread across the businesses, our participation spanning infrastructure, workstation, devices, cloud, software, professional services, AI is across all of them. Specific initiatives like AI Exchange, which was created in Q4 of last year, has moved from concept to commercial activity. And the launch of AI COE in Singapore, the physical experience center, also combined with the virtual COE that we are building during the quarter, is going to be very important and critical for Redington. It's the beginning of a journey on being able to get use cases from customers and partners and find solutions from ISVs. Together these capabilities position us to connect multiple technologies, brands, ISVs, as customer requirements become more complex. We also rolled out five AI learning centers over the last two quarters, now in place in India, executed as part of our CSR program. Again adds to the entire AI focus. Our OEM ecosystem remains central to the strategy. Redington's advantage lies not only in scale, but in the ability to bring hardware, networking, software, cloud, a whole range of product portfolios across markets. That breadth allows us to open new routes to market for vendors and assemble more relevant solutions for partners and customers. Operational quality remains equally important. Working capital was at 35 days, at the lower end of our 35 to 40 day guidance range that we provide every quarter. Return on equity improved to 21.6% and net ROCE to 22.7%. Excluding Arena, these measures were even stronger at 24.4% and 28% respectively. We also regained operating leverage, revenue grew 48%, while operating expenses increased at a lower rate of 40%. We will continue investing in the people, platforms and capabilities required for SSG Software Solutions Group, TSG Technology Solutions Group and AI, but each investment will be assessed, assessed against its ability to create durable returns. Arena remains the principal area requiring corrective action. Revenue was lower by 37% year-on-year. If you remember, we, the Arena subsidiary exited the TBD F contract and the resizing of the Turkey operations since happened, exiting from the Lira business. Redington's share of the loss this quarter was 115 crores. This loss comprises of a business loss and a Lira business transition loss and an exceptional impairment of intangibles of 40 crores. Arena has a totally new management team in place, who is now steering the company through. Our priorities remain restructuring, portfolio choices, and development of a Turkey specific dollar-denominated growth revenue, avenue. Stepping back, Q2 demonstrates the shape of Redington's next chapter. Our scale businesses are expanding, our value portfolio is gaining weight and our investments in cloud, cyber security, and AI, and digital routes to market are beginning to connect. The record H1 outcome gives us momentum, but it also raises the standard of execution we set for ourselves. Our position in India across MEA creates a powerful platform. It gives vendors reach, partners access, and customers the ability to source and integrate technologies across brands.
V.S. Hariharan (Redington Ltd): As AI increases the interdependence of infrastructure, devices, cloud, and software, this ability to orchestrate ecosystems will matter more than ever. Behind every number are Redingtonians who kept customers supplied, partners supported, and operations moving. I want to especially recognize colleagues working in sensitive and conflict affected markets. Their professionalism under difficult conditions has protected business continuity and reinforced the trust we have built with our stakeholders. We enter the second half alert to geopolitical, liquidity, and market risks, but with confidence in the breadth of our portfolio and the discipline of our model. Technology adoption remains a structural opportunity across our markets. Our task is to capture that opportunity responsibly, turn growth into returns, and keep building a stronger Redington. Thank you for your continued trust and support. We will now be happy to take your questions.
Krishnan (Redington Ltd): Just one, one add-on for all of your information. Hari is attending this call from the hospital. His parents are not well. He may not be there for the full call. Just keep the, I mean the questions brief, please. Thanks.
Moderator: Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitin from Investec. Please proceed with your question.
Nitin (Investec): Hello. Hi. Am I audible? Apologies.
Moderator: Yeah, sir, you are audible now.
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