Redington (REDINGTON) Q4 09/10 earnings summary

Executive summary

• FY10 consolidated revenue rose 8.64% to Rs. 13,778.65 crore; profit after tax after minority interest increased 15.45% to Rs. 184.33 crore despite sluggish demand and intense competition.

• Growth was supported by higher-margin products, operational efficiencies, vendor additions and expansion across telecom, consumer electronics, services and supply-chain operations.

Financial highlights

• Consolidated EBITDA increased 10.97% to Rs. 365.72 crore; PBT rose 25.98% to Rs. 275.92 crore and PAT before minority interest rose to Rs. 212.02 crore from Rs. 169.04 crore.

• Standalone revenue increased to Rs. 6,459.88 crore from Rs. 6,071.44 crore; PAT rose 23.26% to Rs. 99.46 crore from Rs. 80.69 crore.

• Consolidated overseas subsidiaries contributed 53.12% of revenue; EBITDA margin on sales and service income reached 2.65%, versus 2.60% in FY09.

• Consolidated operating cash flow was Rs. 11.05 crore, versus cash used of Rs. 99.69 crore in FY09; closing cash and equivalents were Rs. 582.60 crore.

Outlook and guidance

• Management expected growth from Indian e-governance, education and health spending, IT infrastructure upgrades and stronger demand in tier II cities and towns.

• IDC expected Indian state-government IT product spending to grow more than 11% in 2010 and central-government ICT opportunity to grow 14%, with e-governance projects driving demand.

• Broadband connections in India were cited at 8.75 million, with an industry estimate of more than 214 million by 2014, supporting anticipated PC and mobile-device penetration.

• Management planned further Africa expansion and expected the Dubai ADC to begin operations in 2010-11 and the Kolkata ADC in early 2011.