Redington India Ltd.'s promoter Harrow Investments has nearly exited the company, selling more than three crore shares on Thursday. The transactions took place on multiple stocks exchanges and saw prominent fund houses like Norges Bank, Reliance Mutual Fund and Enam Group picking up stake in the company.
While the three financial groups have bought 2.7 crore shares, the data provided by exchanges, did not disclose the buyers for the remaining 41 lakh shares, also sold by the promoter. Harrow Investments held 3.28 crore shares in the company, as on March 31, as per stock exchange filings.
The stock had risen close to 7 percent on Thursday, after the block deal took place. It had recently hit a lifetime high of Rs 156.95 on June 2, before falling nearly 15 percent until the block deal took place.
Redington is the sole distributor for Apple Inc. products in the India and also provides after sales services. The company has another arm which deals with other IT products and mobile handsets.
The company had recently clarified on concerns over Amazon Business denting Redington's sales, arguing that similar models have failed in India in the past. The management also said that organised distributors stand to gain the most from the implementation of the Goods and Services Tax. Brokerage house Investec had recently come out with a report hiking the target price to Rs 172.
We believe the company is clearly on a path to profitable growth with i) increasing proportion of higher margin India and services businesses and ii) consolidation of warehouses post GST leading to 10 basis points improvement in India distribution margins.Nitin Padmanabhan, Analyst, Investec Securities
Redington's business focuses on four verticals i.e., new product categories, foray into new markets, market share gain and new business-adjacent. New product launches and categories are expected to aid the company's margins.
The company also has a low debt-to-equity ratio and had a dividend yield of over 3 percent. The company is among the top two ICT (Information Communication Technology) distributors in India, giving it the advantage of having a broad-based portfolio and relatively low vendor concentration.
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