Redington Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Redington delivered its best-ever quarterly performance in Q3 FY26, characterized by strong double-digit revenue growth and record profits. The company is successfully transitioning from a pure distributor to a technology orchestrator, led by the high-growth Software Solutions Group. While the Arena subsidiary remains a drag on margins, aggressive working capital management and robust performance in India and the UAE have bolstered the overall financial profile.

Highlights

  • Record quarterly revenue of ₹30,959 crores, representing 16% YoY growth.

  • Quarterly profit after tax (PAT) reached ₹436 crores, up 9% YoY.

  • Software Solutions Group (SSG) grew 40% YoY, now contributing 18% of total revenue.

  • Working capital management improved significantly, with working capital days dropping to 28 days.

  • Return on Capital Employed (ROCE) stood at a strong 22.1% for the quarter.

  • India business continues to lead growth with a 25% YoY revenue increase.

  • Arena subsidiary reported a loss of ₹22 crores, though management sees a trajectory toward breakeven by FY27.

  • Mobility segment grew 15% YoY, contributing 35% of the top line, driven by premium demand.

Concerns

  • Chip Shortage and Supply Chain Constraints

Key financials

  1. Revenue ₹30,959 Cr +16%YoY
  2. PAT ₹436 Cr +9%YoY
  3. ROCE 22.1%
  4. Working Capital Days 28 days
  5. PAT Margin 1.4%

What they filed

Q1 FY27: revenue up 34.6%, net profit up 94.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue24,896 26,716 26,440 25,952 29,076 +17%30,922 +16%33,213 +26%34,922 +35%
EBITDA458 602 597 400 589 +29%626 +4%614 +3%708 +77%
Net profit283 403 918 233 350 +24%413 +2%288 −69%453 +94%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentYoY GrowthRevenue Contribution
Mobility15%35%
End Point Solutions (PCs)21%32%
Software Solutions Group (SSG)40%18%
Technology Solutions Group (TSG)-7%—

Guidance & targets

Margin

  • ROCE Range Margin · FY26 · High confidence 18-20%
    Our expectation, we should range between 18% to 20%. ROCE for this quarter at 22.1%. I don't want you to consider this as sustainable.

    — S.V. Krishnan, Finance Director

Other

  • Working Capital Days Other · Steady State · Medium confidence 35-40 days
    We keep telling you that the normal range will be between 35 to 40 days. I think -- I mean, on a steady-state basis, that's the range that we all need to look for.

    — S.V. Krishnan, Finance Director

Profitability

  • Arena Breakeven Profitability · FY27 · Medium confidence Breakeven
    I think next year, we might move towards a breakeven. That's the thought process. But all the efforts are on to make sure this turnaround is in place.

    — S.V. Krishnan, Finance Director

Revenue

  • SSG Growth Revenue · Next few quarters · High confidence 40%+
    SSG will continue to be the 40% plus growth in all markets, and we'll see that across India, Middle East, Africa, Turkey and Southeast Asia.

    — V.S. Hariharan, MD & Group CEO

Risks & concerns

  • Chip Shortage and Supply Chain Constraints

    high

    Shortages are leading to price hikes which may dampen end-customer demand and delay the PC refresh cycle for 12-18 months.

    Both acknowledged

  • Arena Subsidiary Losses

    medium

    Arena reported a ₹22 crore loss this quarter; management is divesting low-margin contracts (Vodafone) to stem losses.

    Management acknowledged

  • Competitive Intensity in TSG

    medium

    Excess competition and brand margin compression are limiting the ability to raise gross margins in Technology Solutions.

    Analyst acknowledged

  • Collectability Issues in Bangladesh

    low

    A one-off $1.4 million AR provision was taken due to collectability issues in Bangladesh.

    Management acknowledged

Areas of evasion (1)

  • Specific details on the 'large deals' in TSG that were delayed were kept vague.

Q&A highlights

3 direct
Chip Shortage and Inventory Strategy Direct
We've still yet to see a big uptick in demand for the end customers. But we believe that will happen because there are more price rises coming up... the channel partners have picked it up. But the sell-through, we have to work through this quarter.

Reveals that current growth is partly driven by channel stocking ahead of price hikes rather than pure end-user demand pull.

Asked by Nitin Padmanabhan, Investec

Gross Margin Compression in TSG Direct
TSG, very clearly, there is a drop. And the drop is on account of the drop in the gross margin that's happening in the business and also on account of the inventory provisions that we need to take.

Explains why overall margins are under pressure despite a favorable mix shift toward higher-margin software services.

Asked by Tarang, Old Bridge

PC Refresh Cycle and Volume Pressure Direct
People are delaying those refresh cycles. But given the price increases, I think it's highly possible that volumes could be under pressure while ASPs go up... the industry is going to take 12 to 18 months to recover.

Management signals a potential volume slowdown in the core PC segment over the next year due to supply constraints and pricing.

Asked by Aejas Lakhani, Unifi AMC

2 min read 5 chapters

Detailed narrative

Record Revenue Performance Driven by India and Mobility

Redington achieved a milestone revenue of ₹30,959 crores in Q3 FY26, a 16% YoY increase. India remains the primary growth engine, surging 25% YoY, while the UAE and GCCL clusters grew 19% and 29% respectively. The Mobility segment was a standout performer, growing 15% and contributing 35% of the total top line, fueled by strong demand in the premium smartphone segment and effective execution in India's direct-to-retail channel.

Software Solutions Group (SSG) Emerges as a High-Margin Pillar

The SSG segment, which includes Cloud, Cybersecurity, and Professional Services, grew by 40% this quarter. It now accounts for 18% of total revenue, up from 15% a year ago. Management highlighted that SSG delivers higher-than-average PAT margins and is benefiting from the enterprise transition to digital transformation. They expect this 40%+ growth trajectory to continue across all geographies, including Africa and Southeast Asia.

Exceptional Working Capital Efficiency

A key highlight of the quarter was the reduction of working capital days to 28, significantly lower than the historical 'normal' range of 35-40 days. This efficiency led to a robust ROCE of 22.1%. While management cautioned that 28 days might not be sustainable as they invest in higher-capital-intensive data center deals, they remain confident in maintaining ROCE between 18% and 20% over the long term.

Arena Subsidiary Turnaround and Divestments

The Arena subsidiary continues to face economic challenges in Turkey, reporting a ₹22 crore loss. However, management is aggressively restructuring the business, including divesting from the Vodafone contract and local currency businesses to minimize interest costs and currency exposure. They have successfully reduced Arena's debt from ₹126 million to ₹94 million and expect the unit to move toward breakeven by FY27.

Headwinds in Technology Solutions and PC Supply

The Technology Solutions Group (TSG) saw a 7% decline, attributed to the timing of large deal executions and a shift from on-premise to cloud infrastructure. Additionally, management warned of an imminent price hike in the End Point Solutions (PC) segment due to acute chip shortages. This shortage is expected to delay the PC refresh cycle, potentially putting volume pressure on the industry for the next 12 to 18 months.

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