Redington (REDINGTON)

FairStock Score: 85/100 — HIGH CONVICTION

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Strong profitability with ROE of 20.23% and ROCE of 18.90%
• Healthy balance sheet: Debt/Equity of 0.29, Altman Z-Score of 5.13 and Piotroski F-Score of 7/9
• Solid growth: sales up 17.90%, profit up 39.51%, 5-year revenue CAGR of 11.77%
• Positive free cash flow of ₹840 Cr with a dividend yield of 2.42%

Concerns

• Promoter holding is 0.00%, raising corporate governance and owner-alignment concerns
• DCF intrinsic value of ₹184.68 is below the current price of ₹220.68
• EV/EBITDA of 67.72 indicates a very expensive valuation on operating earnings
• Trading and distribution business inherently has low pricing power and moat

AI Analysis

Redington is a trading and distribution business, so I start with a skeptical eye. That industry rarely enjoys pricing power, wide moats, or high margins. But the financial record here is better than many manufacturers. It earns 20.23% on equity and 18.90% on capital employed, while keeping debt-equity at a modest 0.29. A distributor with low leverage and good returns can be a steady compounder. Growth is also encouraging: sales are up 17.90%, net profit is up 39.51%, and the five-year revenue CAGR is 11.77%. It generated ₹840 crore of free cash flow and pays a 2.42% dividend. The balance sheet is healthy—Altman Z-Score of 5.13 and Piotroski F-Score of 7/9. Those scorecards tell me the earnings are not merely accounting fiction. At ₹220.68, the P/E is 15.64, which looks reasonable, and the PEG of 0.68 suggests the growth is not fully paid for. But I cannot ignore two things. First, my conservative DCF value is ₹184.68, below the current price. I demand a margin of safety, and the provided data says the margin is negative. The Graham Number of ₹238.01 offers some comfort, but it is not enough. Second, promoter holding is 0.00%. I like owner-operators, not hired hands with no skin in the game. Also, EV/EBITDA at 67.72 is very expensive on operating earnings. This is a good, steady business, but not a great one. I would wait for a better price and watch whether management owns any shares.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer