Redington Limited: Q2 & H1 FY26 - A Quarter of Record Performance and Strategic Shifts

Redington Limited, a prominent player in the IT distribution and solutions space, has reported a stellar performance for the second quarter and first half of fiscal year 2026. The company achieved its highest-ever revenue and profit after tax (PAT) for a Q2, underscoring its robust operational capabilities and strategic execution. Consolidated revenue for Q2 FY26 stood at an impressive INR 29,118 crore, marking a 17% year-on-year growth. Profit After Tax (PAT) surged by 32% to INR 388 crore, demonstrating a significant improvement in profitability that outpaced revenue growth. This strong financial showing reflects Redington's ability to leverage market opportunities and optimize its business segments.

The growth was broadly distributed across various geographies and business units. India and UAE emerged as key growth drivers, both registering a 23% year-on-year increase in revenue. Saudi Arabia also contributed positively with a 10% growth, while the newly formed GCCL cluster grew by 22%. The Mobility Solutions Group (MSG) was a significant contributor, growing by 18% and accounting for 35% of the total revenue, primarily driven by strong demand in the premium segment and successful new product introductions. However, the standout performer was the Software Solutions Group (SSG), which recorded an exceptional 48% year-on-year growth, contributing 16% to the top line. This segment, encompassing cloud hyperscaler business, cybersecurity, application software, and professional services, also delivered higher-than-average PAT, reinforcing its strategic importance.

Strategic Investments and Future Outlook

Redington's management emphasized its commitment to strategic investments, particularly in the Software Solutions Group. The company is actively investing in its digital platform, CloudQuarks, to enhance analytics, white-labelling, automation, and marketplace capabilities. These investments extend to building technical pre-sales teams and strengthening the Redington Academy to train and certify professionals, aiming to create comprehensive ecosystems for managed print service providers and Independent Software Vendors (ISVs). Management expects these initiatives to sustain the SSG's growth momentum and contribute to higher gross margins and profitability in the future.

Another key strategic focus is the development of a robust data centre strategy. Redington is exploring opportunities to engage in large data centre deals, provide essential software solutions from platforms to application software, and fulfill capacity requirements for public, co-location, and private data centres. While this strategy is still in its formation stages, it highlights the company's foresight in anticipating and capitalizing on evolving technological trends. The company also noted signs of a pickup in the PC refresh cycle and increasing AI PC penetration, particularly in the commercial space in India, which could further boost the ESG segment in the latter half of the fiscal year.

Navigating Challenges and Maintaining Discipline

Despite the strong overall performance, Redington is actively addressing challenges in certain areas. The Arena business in Turkey continues to face economic headwinds, resulting in a loss of INR 37 crore for the company's share in Q2 FY26. To mitigate this, Redington has divested its Connect Vodafone contract and plans to exit other Turkish Lira (TL) related businesses. This move is expected to reduce interest costs, minimize local currency exposure, and improve overall profitability, with benefits anticipated from Q3 FY26 and fully realized in the next financial year.

Management reiterated its disciplined approach to capital allocation and operational efficiency. The company aims to keep operating expenses (opex) growth lower than gross margin growth, ensuring sustained operating leverage. While global working capital days increased slightly to 31 days, management highlighted efficient working capital management, partly aided by a higher mix of the mobility business. Redington's consistent recognition as the #1 IT distributor in India for three consecutive years by VAR India further validates its strong market position and execution capabilities.

Redington Limited's Q2 and H1 FY26 results reflect a company in a strong growth phase, strategically investing in future-proof segments while proactively addressing existing challenges. The focus on high-margin software solutions, combined with a disciplined approach to operations and capital, positions Redington for sustained profitable growth and continued value creation for its stakeholders.