The broader markets are trading near all-time highs and it might be difficult to find stocks still offering a decent upside potential. One counter that’s exactly offering the same is Redington Limited, having a market capitalization of INR 14,913 crore. Redington provides supply chain solutions in India and internationally. It offers hyper-converged infrastructure, enterprise storage, storage visualization, fault-tolerant solutions, etc.
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The easiest way to analyze the stock is to look at ProTips which in this case is telling the stock is trading at a low earnings and revenue multiple, has consecutively increased the dividends for the last 3 years and more importantly never missed a dividend payment in the last 18 years. With a dividend yield of 3.25%, clearly this is a great dividend counter for regular-income seekers.
Coming to the shareholding pattern, you would be surprised to know that FIIs hold a massive 57.87% stake in this small cap. Not just that, even mutual funds are impressed with the company’s performance and are holding an 11.96% interest.
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The valuations are probably the biggest reason for such a high institutional holdings. After extensively analyzing the stock with 14 different financial models, the intrinsic value (fair value) is coming at INR 259.1, which is 35.8% higher than the CMP of INR 190.7. In fact, the highest target price (from the 10Y DCF exit model) is INR 342 per share.
For those who rely on analysts’ targets, the average price of 5 analysts covering the stock is INR 219.8, still higher than the CMP. You can see all these figures on the company’s profile page on InvestingPro+.
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Another important check is the Financial Health Score, a great tool to ensure where the company stands after quantifying over 100s of parameters. The process intelligently rates each parameter from 5 (the higher the better). The average of all is then taken to arrive at the final score. Here the score of 4 out of 5 depicts great performance and any rating above 3 qualifies the stock for the portfolio addition.
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