DAM Capital has re-initiated coverage on Redington with a Buy rating and target price of ₹470, implying nearly 20% upside from the current market price of ₹392. According to DAM Capital Research, the memory shortage and distributor consolidation are expected to support revenue expansion and improving returns for the company.
The brokerage expects DRAM and NAND prices to remain elevated for at least the next two years, with most new capacity expected to come online over CY27 and CY28. As reported by DAM Capital, DRAM and NAND prices have already risen around 5x and 4x, respectively, since the end of CY24. The memory shortage is increasingly favouring distributors with scale and balance sheets to fund higher working capital requirements.
DAM Capital expects Redington's revenue to grow at around 17% CAGR over FY26-29E, with FY27E growth largely price-led before volumes take over as deferred replacement demand returns. The brokerage projects PAT to grow at around 20% CAGR, while RoCE could rise by about 500 basis points to around 21% by FY29E. According to DAM Capital, the company's stronger mix and improving returns justify the premium valuation.
DAM Capital highlights Redington's net debt-to-equity below 0.5x, A1+ credit rating and a 16-year record of provisions below 0.3% of revenue as key advantages in funding the current cycle. The brokerage estimates that industry growth is already running above Redington's self-funding threshold of around 10-12%, positioning the company to benefit from constrained, high-value inventory being routed towards large distributors.
DAM Capital values Redington at 13x FY29E EPS and arrives at the target price of ₹470, arguing that the company's stronger mix, improving returns and balance-sheet advantage justify the premium. The brokerage expects this to drive further consolidation among distributors, with vendors favouring players that have scale, strong balance sheets and the ability to support inventory and payment cycles. According to DAM Capital, the resulting market-share gains could be structural because lost vendor relationships, credit lines and channel presence are difficult for smaller players to rebuild.
