Redington Credit Analysis

Transcription

1 From the SelectedWorks of Yogendra Sisodia Summer July 1, 2009 Redington Credit Analysis Yogendra Sisodia Available at:

2 Swati Khandekar(1031) Sumit Bafna(1032) Yogendra Sisodia(1033)

3 Introduction

4 Supply Chain Management

5 Foundation Redington established in 1961 is today positioned as one of the leading Supply Chain service provider in IT, Telecom, Consumer Electronics & Home Appliances Industries. Redington IPO came during FY

6 Main Areas Distribution Business for Information Technology Products (HP, Intel IBM, Motorola). Distribution Business for Consumer Electronics and Digital Lifestyle Products (LG and Whirlpool Consumer Appliances). Support Service Business (Authorised Service Provider for Sun Micro and HP). Foray into 3PL/4PL Services.

7 Major Brands IT Products BenQ Socomec - ups Oracle NeoAccel Ncomputing Luminous Consumer & Lifestyle Products XBox 360 Apple BlackBerry EA O2

8 2009 Milestones A major milestone in MEA operations was the investment by a large and globally well known private equity fund,m/s. Investcorp Gulf Opportunity Fund Company I.B.S.C (Investcorp) in Redington Gulf. Redington Gulf FZE, Dubai, has been ranked as the No.1 IT Distributor in the Middle East by Channel Middle East Magazine. The favourable ratings received from rating agencies, CRISIL and ICRA, for the short term facilities and under BASEL II norms for bank borrowings.

9 Organization and Capital Structure

10 Group Structure

11 Institutional Holdings Mutual Funds Foreign Institutional Investors Bodies Corporate Individual shareholders holding nominal share capital up to Rs. 1 lakh Individual shareholders holding nominal share capital in excess of Rs. 1 lakh Clearing Members Directors & their Relatives & Friends Foreign Corporate Bodies Hindu Undivided Families Non Resident Indians Trusts Foreign Nationals

12 Capital Structure SOURCE OF FUNDS Shareholders Fund Capital Reserves and Surplus Total Minority Interest Loan Funds APPLICATION OF FUNDS Fixed Assets 8, Current assets Current Liabilities

13 Trends

14 Consolidated Income Statement

15 Revenue Growth

16 EBITDA Growth

17 PBT and PAT Growth

18 Industry

19 Industry Drivers The revenues of the REDIL Group have grown rapidly at a fiveyear CAGR of 45%. Along with its subsidiaries, REDIL is one of the largest IT hardware distributors in India and enjoys a leading market share in Africa and the Middle East. Along with its closest competitor, Ingram Micro India Private Limited controls nearly 60% of the IT distribution market in India. Strong Vendor relationships and Distribution Network with over 60 brands.

20 Close Competitors HCL Infosystems HCL Infosystems is among the leading players in all the segments comprising the domestic IT products, solutions and related services, which include PCs, Servers, Imaging, Voice & video solutions, Networking Products. Moser Baer A multi-technology organisation, diversifying into exciting areas of Solar Energy, Home Entertainment and IT Peripherals & Consumer Electronics. Spice Mobiles Spice Mobiles has a bouquet of offerings targeting entry, mid & premium segments. D-Link India D-Link India's product range enjoys substantial market share in India and ranks among the leaders in Modems, Structured Cabling, Wireless LAN and Switches.

21 Scale, Diversification & Competitive Position In terms of geographical mix, the company derived 52% of revenues from overseas markets in FY Exposures to segments like Government, PSUs, public sector banks and educational institutions.

22 Key Ratios

23 Liquidity Ratios (Consolidated) Redington Hcl Info Moser Bear Spice Mobiles Liquidity Ratio Current Ratio Cash Ratio Quick Ratio

24 Profitability Ratio (Consolidated) Redington Hcl Info Moser Baer Spice Mobiles Profitability Ratio Net Profit Margin ROA

25 Debt Ratio (Consolidated) Redington Hcl Info Moser Baer Spice Mobiles The Debt Ratio Debt to Equity Interest Coverage Ratio

26 Turnover Ratio (Consolidated) Redington Hcl Info Moser Baer Spice Mobiles Turnover Ratio Fixed-Asset Turnover Accounts Recievable Turnover Inventory Turnover Collection Period Turnover Period

27 Bankruptcy Ratio (Consolidated) Bankruptcy Ratios Redington Hcl Info Moser Baer Spice Mobiles NetWorking Capital to Total Assets EBIT to Total Assets

28 Concerns - Operational Cash Flow

29 Concerns - Margins

30 Operational and business risks Fall in product prices. Technological obsolescence. Customer defaults. Foreign exchange risks. Interest rate risks. Inventory carrying risk.

31 Ratings Programme CRISIL Rs.6375 Million Cash Credit Limits CRISIL Rs.1030 Million Working Capital Demand Loans CRISIL Rs.2295 Million Short-Term Loans Rating A+/Stable A+/Stable P1+ CRISIL Rs.300 Million Letter of Credit P1+ CRISIL Rs.6000 Million Short-Term Debt Programme ICRA 6,000 million, short-term debt programme ICRA 5,575 million, cash credit facilities from the banks P1+ A1+ A1+

32 Conclusion YES

33 Methodology Used Data direct from Annual Reports. No CRISIL and ICRA Credit methodology followed. Neglected Corporate Governance. Our recommendation is on relative basis (in same industry).

34 Thanks