Redington’s sales surge leaves margins almost flat as other income lifts profit
Revenue grew 66.12% year on year, but costs grew faster and other income accounted for 50.66% of profit before tax.
Filed 04 Nov 2026, 13:44 IST · Redington Ltd (REDINGTON)
Key takeaways
- Standalone revenue rose 66.12% year on year, but expenses grew slightly faster at 66.16%, narrowing operating margin by 0.03 percentage points.
- Net profit increased 57.70% year on year, while other income contributed 50.66% of profit before tax.
- Operating margin fell 0.05 percentage points sequentially to 2.15%, leaving Redington fifth from the bottom among 38 reported Services peers.
Price around the results
Sales growth did not translate into operating leverage
Redington’s standalone revenue grew 66.12% year on year and 21.55% sequentially, but expenses rose 66.16% year on year and 21.61% sequentially. The small cost overrun left operating margin down 0.03 percentage points year on year and 0.05 percentage points from the previous quarter. Net profit still rose 57.70% year on year and 161.25% sequentially, helped by factors below operating profit.
Other income drove half of pre-tax profit
Other income contributed 50.66% of profit before tax, making the reported profit increase less reflective of operating performance. Sequentially, other income rose 1,857.86%, while interest expense increased 33.45%. The tax rate fell 12.11 percentage points sequentially, from 26.01% to 13.90%, further supporting the sequential increase in net profit.
Margin remains near the lower end of the peer range
Operating margin has recovered from 1.97% in Q3FY26 to 2.15% now, but it remains below 2.29% in Q1FY26 and declined for a second consecutive quarter. Redington’s 2.15% margin was 18.26 percentage points below the 20.41% median for 38 Services peers that had reported, placing it fifth from the bottom. The year-on-year comparison is also modest on quality: revenue grew 66.12%, while operating profit grew 64.09%.
Presentation flags automation and circular-economy initiatives
Management said Redington is implementing reverse logistics and promoting reuse and refurbishment to reduce environmental impact. The presentation also flags AI-based service automation as reducing the number of system integrators and disrupting the ecosystem. Separately, management said the company was ranked India’s number one distributor by VAR India.
Past result reactions have usually been positive
Across the last eight reported results, Redington’s stock rose after six and fell after two, with a median absolute move of 6.40%. The recorded moves ranged from -7.80% to +15.86%, so the stock has historically shown a wide response around results.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹25,225 cr | ₹20,753 cr | +21.55% | +66.12% |
| Other income | ₹493 cr | ₹25 cr | +1857.86% | +54.67% |
| Expenses | ₹24,682 cr | ₹20,296 cr | +21.61% | +66.16% |
| Operating profit | ₹543 cr | ₹457 cr | +18.82% | +64.09% |
| Operating margin (%) | 2.15% | 2.20% | — | — |
| Interest | ₹51 cr | ₹38 cr | +33.45% | +60.68% |
| Depreciation | ₹12 cr | ₹10 cr | +12.54% | +17.05% |
| Profit before tax | ₹974 cr | ₹434 cr | +124.50% | +60.10% |
| Tax | ₹135 cr | ₹113 cr | +19.96% | +76.74% |
| Net profit | ₹839 cr | ₹321 cr | +161.25% | +57.70% |
| EPS (₹) | ₹10.73 | ₹4.11 | +161.07% | +57.79% |
Operating margin of 2.15% compares with a Services sector median of 20.41% across 38 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
New initiatives
- Redington is implementing reverse logistics and promoting reuse and refurbishment to reduce environmental impact.
Competition
- Redington was ranked India's number one distributor by VAR India.
Problems & risks
- AI-based service automation is reducing the number of system integrators and disrupting the ecosystem.
What to watch
- Whether operating margin can move back above 2.15% after the sequential decline of 0.05 percentage points.
- Whether expenses continue to grow faster than revenue after the year-on-year gap of 66.16% versus 66.12%.
- Whether other income remains a large contributor after accounting for 50.66% of current-quarter profit before tax.