Redington (REDINGTON) Q2 FY27 Profit Dips Despite Record 48% Revenue Surge
Redington's Q2 FY27 revenue hit a record high, but profit slipped sequentially as a one-off impairment and rising costs squeezed margins.
Redington posted its highest-ever quarterly revenue of ₹42,947 crore in Q2 FY27, up 48% year-on-year. However, net profit fell 6.8% sequentially to ₹422.5 crore, weighed down by an impairment charge at its Turkish subsidiary and higher interest costs.
For a global technology distributor, the story is written in the flow of hardware and the margins on each turn. Redington’s September quarter delivered a torrent of sales but left less profit per rupee than the one before, framing a quarter of impressive scale and underlying strain.
The numbers show a business accelerating. Revenue surged 48% year-on-year to ₹42,947 crore, a company record. Profit grew 21% over the same period. Yet, compared to the June quarter, profit slipped 6.8% even as sales jumped 23%. The net profit margin thinned to 1.0%, down 30 basis points sequentially.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 42,947YoY +48% | 34,922 | 29,076 |
| Profit (₹ Cr) | 422.5YoY +21% | 453.5 | 350.2 |
| Net Profit Margin (%) | 1.0YoY -17% | 1.3 | 1.2 |
Why the profit slipped on higher sales
A one-off impairment at its Turkish subsidiary, Arena, was the immediate culprit. According to CNBC-TV18, Redington took a ₹39.7 crore exceptional charge related to this investment. Excluding this, profit after tax was ₹581 crore, a 50% year-on-year jump, as noted in the company's earnings call.
Beyond that charge, the cost of funding rapid growth bit into margins. Interest expense leapt 43% quarter-on-quarter as working capital needs expanded. Employee costs and depreciation also rose faster than sales sequentially, eroding operating leverage.
The engine behind record revenue
Demand was broad and deep. The Investing.com transcript highlights that the Technology Solutions Group, which sells servers and infrastructure, grew 91% year-on-year. This was driven by enterprises migrating from CPU to GPU-based systems for AI workloads, often at four times the average selling price.
India led with 67% growth, while the Middle East and Africa grew 41% despite geopolitical tensions. The company’s core business, excluding the struggling Arena unit, saw revenue expand 54% and profit jump 55%, per the same transcript.
The cash trade-off for growth
High growth in a distribution business consumes cash. The company reported negative free cash flow of ₹1,871 crore for the quarter, as working capital days held at 35. Management told Investing.com this is a trade-off for the growth rate, with debt-to-equity at a comfortable 0.55x.
How long can this run last?
Management expects the second half of FY27 to deliver revenue growth “north of 25%”, assuming no major demand slowdown. The Technology Solutions Group is seen remaining the strongest driver. However, they flagged risks: price increases of 30-50% on some products could dent consumer demand, and Middle East logistics remain disrupted.
The Arena subsidiary, which reported a ₹115 crore loss this quarter, remains a persistent drag with an uncertain turnaround timeline in Turkey’s challenging economy.
Key Points
- Revenue reached a record ₹42,947 crore, up 48% year-on-year, led by a 91% surge in Technology Solutions./n- Headline profit dipped 6.8% sequentially due to a one-off impairment and rising interest costs, masking a 50% underlying profit growth.
- Working capital intensity led to negative quarterly free cash flow, though half-yearly cash flow stayed positive.
- Guidance for H2 FY27 is over 25% revenue growth, contingent on stable demand and geopolitics.
Hexa Perspective
This quarter reveals Redington successfully riding a powerful enterprise infrastructure cycle, particularly for AI-ready servers. The 48% revenue growth is a testament to that positioning. Yet, the margin compression and cash consumption underscore the capital-intensive nature of this growth phase.
The investment case now hinges on whether the superior growth of higher-margin software and solutions businesses can, over time, offset the margin dilution from large, low-margin hardware deals. For now, the market is rewarding the top-line momentum, but the sustainability of returns will depend on managing the cost of capital that fuels it.
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