Redington (REDINGTON) Q3 24/25 earnings summary

Executive summary

• Achieved record quarterly revenue of INR 26,764 crores and highest-ever quarterly profit of INR 400 crores, with revenue up 14% and profit up 17% year-over-year.

• Global revenue (excluding Arena) up 16% YoY; EBITDA up 17%, PAT up 19%.

• Growth was broad-based across geographies, led by UAE (26% growth) and India (18% growth), with signs of recovery in Saudi Arabia and continued momentum in Africa.

• All business units grew, with Cloud business up 42%, Technology Solutions Group (TSG) up 28%, Mobility Solutions Group up 9%, and Endpoint Solutions Group up 6%.

• SISA segment revenue up 17% YoY, EBITDA up 19%, PAT up 36%.

Financial highlights

• EBITDA margin for the quarter at 2.5%, and for nine months at 2.3%, within the guided range of 2.3%-2.5%.

• Gross margin for nine months at 5.2%, down from 5.7% YoY, mainly due to normalization, large deals with lower margins, and increased competition.

• Interest costs increased due to higher factoring costs, especially from large deals outside Arena and a 14% QoQ increase within Arena.

• Net debt reduced from $153 million at Q1 end to $137 million at December end; gross debt/equity at 0.4x, net debt/equity at 0.2x.

• Q3FY25 ROCE at 27%, ROE at 20%.

• Free cash flow for Q3FY25 was negative INR 2,046 Cr due to working capital changes; 9MFY25 free cash flow negative at INR 221 Cr.

Outlook and guidance

• Optimistic on Q4 due to fiscal year-end spending in India, backlog of deals, and continued momentum in Cloud and TSG.

• Expect some demand slowness in Middle East and Turkey in March due to festive season.

• Confident in maintaining EBITDA margin in the 2.3%-2.5% range for the next year.

• Bullish on all business verticals for CY25, with anticipated growth in AI-enabled smartphones, cloud, and technology solutions.

• Forward-looking statements highlight risks from macroeconomic trends, currency fluctuations, regulatory changes, and competitive pressures.