Redington (India) Limited (NSE: REDINGTON) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
V.S. Hariharan — Group Chief Executive Officer
S.V. Krishnan — Whole Time Director and Global CFO
Analysts:
Nitin Padmanabhan — Analyst
Aejas Lakhani — Analyst
Unidentified Participant
Priya Rohira — Analyst
Saurabh Dhole — Analyst
Payal Shah — Analyst
Nirmam Mehta — Analyst
Sahil Doshi — Analyst
Nikunj Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Reddington Limited Q3 and FY ’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal operator by pressing Star 10 0 on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. V.S. Hariharan, Group CEO. Thank you, and over to you, Mr. Hariharan.
V.S. Hariharan — Group Chief Executive Officer
Thank you. Good morning, everyone.
I’m really happy to share with you our Q3 ’25 results. This has been the highest quarter revenue recorded at INR26,764 crores and the highest quarterly profit ever at INR400 crores. Our revenues grew at 14% with-profit growing at 17% faster than the revenues. Overall, PAT percentage was at 1.5%. It has been a continuing story of profitable growth over the quarters with growth coming back strongly. Strong execution across business segments and across geographies contributed to the performance.
From a geography perspective, the revenue growth was contributed by strong growth in UAE at 26% and India at 18%. We are seeing signs of profitable growth recovery in Kingdom of Saudi Arabia and Africa has continued its momentum on growth over the last few quarters. From a business unit perspective, all business units registered good growth with cloud business unit being our stellar performer with a 42% top-line growth, driven by continued success in the hyperscaler business and the subscription software in our portfolio. CSC continues to contribute well to the profits and contributing to above-average net profit.
The Technology Solutions Group this quarter grew well at 28%, driven by strong enterprise demand across the theaters and big deals. The Mobility Solutions Group was steady at 9% and the Endpoint Solutions Group was steady at 6%. The growth of the business units was seen across both India and Middle-East Africa. The business teams and operations did an excellent job of working capital and we achieved 33-day working capital, an improvement of three days. Was at 27%.
Our lower average working capital and our three working days also helped us the lower interest rates on lower interest cost. OpEx control on spend was very good this quarter. It just grew at 1%, much slower than the revenue growth. Now coming to Turkey, the high inflationary and interest-rate environment continued, though softening a bit, inflation is now down below 45%. The Lira interest rates have been getting revised and now down to 45%.
The decline of market demand is also flattening out. Our subsidiary arena did a better job in managing inventories and receivables resulting in lower working capital costs. We also managed the operating expenses very well, resulting in a small profit this quarter and a better result. With regards to the payment divestment from Arena, approvals from competition Commission have been obtained. We are still awaiting approval from Central Bank. With the new growth trends on cloud AI and digital transformation, we remain optimistic on the outlook going-forward.
For Q4, up — with the fiscal year end for India for many corporates and government with the budget spread, backlog of deals we have carried over from Q3 as well as momentum in both the Cloud and the Technology Solutions Group, we are optimistic on Q4. March being a festive month-in many parts of Middle-East and Turkey, we could see some slowness in-demand in that part of the world. We’re also planning on an analyst meeting in the next one or two months. And as we get closer to the date, we will keep you all informed.
Thank you very much. We look-forward to your questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
The first question comes from the line of Nitin Padmanabhan with Investec. Please go-ahead. Please go-ahead.
Nitin Padmanabhan
Just wanted your — yeah, am I audible?
Operator
Yes, go-ahead.
Nitin Padmanabhan
Okay, great. So wanted your thoughts on the working capital intensity. So, I think on a year-on-year basis, the contribution of the non-mobility business is actually higher. But we still see that the working capital days are down to around 33 days. Do you think there’s something from a mix perspective here that could keep it at these levels or do you still think that the normalized working capital days can be higher?
S.V. Krishnan
Okay. We still feel, Nitin, the working capital range on a steady-state basis, we should consider between 35 to 40 days. If you recollect last quarter, there was a substantial reduction and from there, there is a bounce-back. So to answer your query, yes, the contribution from non-mobility increased, but still the working capital growth is lower than last year because we have had an excellent September closing. That’s the reason. But on a steady-state basis, I think 35% to 40 is a proper 1, I mean range.
Nitin Padmanabhan
Got it, got it. From a — so I think in your commentary, you did mention that at least looks like for India, Q4 can be strong because it’s fiscal year end and things get passed on for closure. How — so when we look at both India and/or and the rest of the world business, it looks like CISA could continue the current growth rates, but the rest of the world will see moderation. Is that a fair kind of understanding?
V.S. Hariharan
I think we are optimistic Nitin in UAE and Kingdom of Saudi Arabia as well for Q4, based on everything we see. But because the last month of the quarter is the festive month, so we cannot anticipate it will be a change or not. But based on where we are, we see the similar projection in terms of growth rate and optimism. I don’t want to Call-IT moderation, but we just need to be prepared if there is a surprise in March in terms of the slowness.
Nitin Padmanabhan
Got it. And just one last question. I think from a Turkey perspective, is the current quarter’s increase in factoring costs related to Turkey? So that’s one. And do you think the pay net I think the amount sort of comes in Q4 and post that we should start seeing motivation.
S.V. Krishnan
Okay. See, the increase in the factoring cost from INR33 crores last quarter to INR71 crores in the current quarter is mainly contributed outside of. We have had some large deals with higher credit days and we had decided to sell these receivables. That was one of the factor. And in Arena, it has moved up from 31% last quarter to 36%, which is about 14% quarter-on-quarter increase. And outside of Arena, it is more one-off that may not sustain.
Nitin Padmanabhan
Okay, okay. But even this — okay. So this is large deals may — okay. Fine. Fair enough. I’ll come for a follow-up later. Thank you so much.
S.V. Krishnan
So let me answer this also. See, a part of this margin would have been there in the margins for those larger deals.
Nitin Padmanabhan
Got it, got it. Got it. That’s helpful. That’s helpful. Thank you so much. And all the very.
S.V. Krishnan
Thank you.
Operator
A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Aejas Lakhani with Unifi. Please go-ahead.
Aejas Lakhani
Yeah, hi, team. Congratulations on a very good set of numbers. The efforts made by the management over the last couple of quarters have started to go fruit. So congratulations to the team.
Krishant sir, Harish sir, I wanted to first understand that could you call-out what is — what is causing the strong — what are the demand drivers in India and UAE that is reflecting in these kind of growth rates?
V.S. Hariharan
Okay. I’ll try and-answer in one dimension and Christiani can add. So clearly TSC has made a big contribution this quarter, both in India and Middle-East Africa and both small and big deals and the demand has been strong. Again, TSC, we have a range of products, hardware and software. So I would say it has all come through and execution has been good. Mobility has actually been quite strong in India, both on Apple and Android, and that has contributed to the growth as well. And I would say these are two big factors that has driven the growth. And just our execution on opex, our execution on working capital execution on everything else has also contributed an uplift to the profitability to grow as fast, if not and faster than the revenue. I would say primarily the Technology Solutions Group followed by the Mobility Solutions Group.
Aejas Lakhani
Got it. So for UE also, what are the demand drivers?
V.S. Hariharan
UAE again it is Technology Solutions Group and they and the mobility. Those are the two business units. Cloud is also a driver. But in terms of actual numbers and contribution, these would be the two direct ones. If you are following the trends on UAE, there’s a lot of investment going on in cloud and AI by government and corporates in UAE. So we’ve taken advantage. There’s been a fair amount of deals won in UAE, which has contributed to the growth this quarter. And one more item I wanted to add is the India festive season clearly played a role in the first month of the quarter, that was a big uplift. It was — the consumer demand softened a little bit second and third month, but the first month the consumer demand was hot because of the festive season?
Aejas Lakhani
Got it. Sir, my second question is on the gross margin. So if you adjust for the inventory provisioning that was there, especially in FY ’25 because first two quarters there was higher provisioning and then because of what we did in Saudi and then we’ve taken a write-back. But if you look at the Nine-Month number Y-o-Y and compare them excluding the inventory provisioning, we are still lower. So the number nine months prior was 5.7 versus 5.2 in this nine months. So how do you see the gross margins incrementally from here on in the 4th-quarter and in the next year?
S.V. Krishnan
Okay. So first of all, I need to tell you in first-quarter and second-quarter, we’ve had higher inventory provision. And if you recollect in the last earnings call, we did talk about this will come back-in H2 and we were confident. And a part of it has happened in the current quarter and which is the reason why you will see the inventory provision the same reversal in Q3. For nine months, the inventory provision broadly tracks our long-term average. I mean, one of — I would say there are a couple of factors for the gross margin drop.
One is, I mean there is normalization that happens and which all of us know. And I would want to mention here that we have looked at all the global tech distribution companies, their profitability in the recent quarters. Very clearly, our profitability is on-top. The everyone is in the range of about 1% to 1.2%, 1.3% and we are at about 1.5%. So very clearly, because of various actions that we had taken, our margins are better than the rest of the industry. But there is a normalization factor, which we need to keep in mind.
Second is, I mean, the large deals, again, we had spoken last-time would not come at similar terms. Either we may have to make a compromise on the margin or on the working capital that also is one of the contribution to this. And the third is, of course, we being a market-leader in many of the markets, there are increased competition. And obviously, this is something that we have to absorb it as a — as a new norm and we need to work on it. But we are trying to do our best. Also, we need to understand that there are normalizations that are — that are there and we are trying to address it in the form of better operational efficiency and better working capital management.
Aejas Lakhani
Got it. Sir, could you just speak about now the EBITDA line-item and how we should think about it for the next year?
S.V. Krishnan
Okay. So we had been talking about an EBITDA between 2.3% to 2.5%. We still feel that can be — that can be the trend as we move into the future. This quarter, we had been in the top-end of the EBITDA, which is at 2.5%. But if you take for the full nine months, it is at 2.3%. I just want to mention here, this EBITDA calculation considers other income, which is how normally we do and that has been our request to the market participants also all-the-time.
Aejas Lakhani
Got it. So sir, you feel confident of being able to maintain the 2.3% to 2.5% band in the next year. Is that a fair understanding?
S.V. Krishnan
Yes.
Aejas Lakhani
Okay. Okay. Got it. Sir, could you now comment please about how is Turkey as a region shaping up? And also if you could expand — I didn’t catch your earlier point that the total factoring cost had a one-off and the normalized arena factoring was at INR34 crores. So could you just break-up what was the one-time factoring cost and how Turkey is shaping?
V.S. Hariharan
Okay. I will address the — how is Turkey shaping up. So I need to break-up the business into, let’s say, two, three parts. One is the software business in Turkey. We have a pretty nice focus software business that’s growing quite well despite all the conditions and that’s largely enterprise and government consumption. That’s a combination of licensing and subscription models. It’s roughly about 10% to 15% of the business that’s growing nicely. The PC business was declining in the high-teens the last few quarters, but this quarter, based on the results that we saw, the decline was not as bad. It is still declining. So going-forward, we don’t see a recovery, but we see the decline in the market opportunity not to be as steep.
With the inflation rate coming down below 45 and the interest-rate trending downwards the interest-rate, we do expect to see a little bit of optimism, though the projected GDP rate for the next year in Turkey is a decline year-on-year. So those are the two, three parts. The mobility channel continues to be flattish with a small growth maybe. So we see decline, software growth, mobility flattish. So I think it’s a holding pattern and we want to make sure that we are operationally efficient with our OpEx and our management of inventory and accounts receivables so that we continue to move-in the direction of being in the green side on profitability.
S.V. Krishnan
If I can add-on Arena with a little bit of numbers, Aejas, if you look at the first two quarters, so this the 3rd-quarter, our revenue de-growth has come down quite significantly. It’s only about 5% de-growth in Q3. This is double-digit growth — degrowth in the first two quarters. PAT was a significant loss in Q1, improved but still was loss in Q2, but this time, I mean, it became positive. We have had a positive missing profit in Q3. Net-debt end of Q1, we were at about $153 million and end of December, it had come down to $137 million. Also, working capital days had come down. The percentage of a — I mean aged inventory to the total inventory had come down, the percentage of overdues have come down. So it’s an all-round reduction that had been attempted. And also on the headcount, I mean, you have to give the credit to the team, about 15 percentage there is a reduction in the headcount from the time where they started the year. So in-spite of the economic challenges and the borrowing challenges that are there, all these have happened and we think we will be — we will be at it.
As far as factoring is concerned, I think what you had seen in Q3 is something that should continue in Q4 subject to, as Hari said, we are waiting very eagerly for the pay net closure. Whenever that happens, it will have an advantage in terms of our interest and finance cost, which includes factoring. The one-off factoring that I had mentioned related to — see, this we keep doing even outside of the Sync Turkey. In Turkey, as we had mentioned, we do this because we have a — we have a challenge in terms of sourcing funds from the banking channels.
Here, in rest of the places, we do factoring as a risk management exercise. And I mean, as you know, normally, we can take only about a limited amount of credit days. If we had to do some deals, which calls for much longer credit days, we also find a way to hive it off, which is what has happened and that’s why I said to Nitin that there is a one-off cost in this period. And it is built — I mean it is built-in in the gross margin also.
Aejas Lakhani
Got it. Krishnan, sir, just very quickly, we’ve had a very good year from a revenue growth standpoint and we’ve been able to curtail costs extremely tightly. And some of the excessive costs that were sitting, which we’ve spoken about maybe 3/4, four quarters back, we’ve now been able to sort of normalize them and we’re sitting at an extremely tight cost structure. But how do we — how should we envisage this going into the next year?
V.S. Hariharan
Yeah. So just to answer to that question. So first of all, we’ve played a differential role between where there is no-growth or where we had excessive cost in terms of optimizing cost. We have invested in areas like cloud and technology solutions to make sure that we can keep up with the need in the market and mobility as well. So as we go into the next year, obviously, we’ve taken out all the — the unnecessary costs and right-sized investments, rightsize the people investment as well, but we will see growth now and OpEx growth keeping in-line with revenue and gross margin growth because we do need to invest in the business in all the growth markets.
S.V. Krishnan
And if I can supplement, there are lot of efforts being taken in this direction. And whenever you move-in this direction, there can also be some one-off additional costs that will come in, which also is there. But having said that, I think into the future, since the industry is evolving more into the services and technology, et-cetera and the technology investment is very important. Some of this, we also keep in mind, we don’t want to under underinvest and then risk the growth into the future. So, that’s something we would want you to reckon as we — I mean as you look at the numbers in future.
Aejas Lakhani
Sir. Thanks for that. And sir, finally, could you just speak about the signs of recovery you’re seeing in Saudi. You know from the last two-quarter calls, you’ve been calling out that Saudi has seen a reorientation in the budgets. So could you just speak a little bit about how the micro-market is shaping up?
V.S. Hariharan
Yeah so we don’t have the all the exact details and how they reprioritize budgets, but clearly we’ve been in Saudi for the last two quarters. I personally have been a couple of times and we’ve met with ministers, we have met with the local teams on-the-ground. And on the value side of the business, clearly, the — there is optimism in terms of how the numbers will come back and they have reprioritized some of the budgets based on their Vision 2030 plan that keeps getting revised. So that part of the business, the technology solutions Group and the cloud, there is huge investments. In fact, the coming weekend there is an event called event, which is on Sunday, Monday, Tuesday where all the tech giants and their leadership team and CEOs are there.
Clearly, everyone is seeing the market recovery on the value side of the business with the government investment — leading from the government investments and the corporate investments there. So we definitely — outlook is there, but we have to wait-and-watch the next few quarters. This quarter was a nominal growth and the coming quarter, Q1, we do expect to see a nominal growth as well. But into the new fiscal year starting April 1, we are — we are bullish on.
Aejas Lakhani
Noted. And sir, just my final question is that the enterprise deals carry with themselves slightly lower margins and lower working capital and we’ve had a higher sort of contribution from enterprise deals. So if we adjust for that base, is it fair to say that the business is trending more already in the lines of the EBITDA that we envisage for the business.
S.V. Krishnan
It is already there with — I mean that’s what I had mentioned, right, in the range of 2.3 to 2.5 for this quarter, it is a 2.5 adjust and for nine months, it is 2.3. So we are already there including the deals. See the deals could come and go. We don’t want that to materially impact. If that impacts, we will definitely tell you. Right now, whatever we are telling you is all-inclusive.
Aejas Lakhani
No, no, sir. Thank you and all the best.
S.V. Krishnan
Thank you.
V.S. Hariharan
Thank you.
Operator
Thank you. Next question comes from the line of with Amiral. Please go-ahead.
Unidentified Participant
Hi, no, no, thank you for the fantastic result. So I have two questions. So first question, could you just quantify the various one-offs of impact on margins this quarter because I think there should be some reversal in inventory provision this quarter and maybe other reasonable provisions there.
V.S. Hariharan
Jalion, your voice is not clear. Can you repeat the question please?
Unidentified Participant
No I just want wanted to ask for any clarification on any one-offs this quarter impact on the margin, like any reversal of inventory or receivables provisions that were done. So we have to quantify that for each quarter.
S.V. Krishnan
Yeah. So as we discussed the only key one-off that I would want to call-out is the inventory provision reversal. We discussed if you recollect in the last call, we have had more inventory provision to service our long-term average. And we did say that these were one-offs and will get reversed, we will be able to liquidate in the rest of the year. So yeah, part of it had got addressed and that had come in the gross margins.
V.S. Hariharan
Would you quantified at least how many bps?
S.V. Krishnan
It’s about 11 bps the reversal, normally on an average, you will find about 6 bps the positive provision. So the delta is about 17 bps.
Unidentified Participant
Okay, great. Thank you. And second question is on the reappointment of Haran as the MD and CEO, would you call any incentives or any target with his new appointments in the next five years and maybe any like key KPIs that we should be looking at here. Thank you.
S.V. Krishnan
Okay. See there are some standard performance metrics the Board evaluates the — I mean, the complete leadership team and accordingly the CEOs. We do follow the same metrics in this case. I can tell you whatever you track plus we consider Rose as an important metric is what we are all this thing weighted on plus the strategy into the future.
Unidentified Participant
Thank you so much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Priya Rohira with Emkay Global. Please go-ahead.
Priya Rohira
Yeah, hi. Thanks the management on a great execution and. So it’s been a very decent quarter if I look at across the geographies with all the verticals showing great performance. Especially with respect to the PSD segment, if you could throw some light, what we have seen across is both across ESA ROW and then boiling down to a 28% growth for global. What sort of trends you’re seeing in the — in the macro market which is driving this growth?
And secondly, does this include the data center services or the data center supplies, which you would be going through and any color over there would be helpful. My second question is on the free-cash flows. I do see that because of the inventory, your working capital days has gone down. But — and since you highlighted that this is going to normalize for 35 to 40 days. Do we see that changing in the coming quarter? Yeah. These are the two questions and maybe I’ll just take a follow-on.
V.S. Hariharan
Okay. Let me talk a little bit about the growth rates. Clearly, cloud is an area we are seeing. And when I say cloud, it includes software licensing, software, subscription, SaaS, platform as a service, all of that put together and not just the hyperscaler business. We definitely see that as a growth and getting underlying advantage of that growth trend in all markets, India, UAE, Saudi as well as Africa and in Turkey too. And that is actually driving part of the growth rate in Q3. And that comes in CSE, the cloud solutions business as well as the Technology solutions business. Data center is also clearly a driver, both in India and in UAE. And both these markets we have participated both directly in the purchase of equipment into the data centers as well as when the data centers create capacity and we need to take care of that demand through our mid-market.
So, data centers is a key component and that’s contributing to some of the large deals also in India. So if I had to add a high-level, say these are the two big ones. The mobility solutions in India, the premiumization, the Indian market is looking for premium phones. The premium consumption of premium smartphones in the market has grown. So that has resulted in a growth in the mobility segment over the last two quarters, both on Apple and Android, that’s clearly there. We may not have got that much benefit of that in Middle-East Africa. The PC business is growing, not growing at the same pace that we would have wanted. We expect in the coming few quarters as we get into this year with a more high-end AI PCs, we expect a little bit more traction on AI PCs as well as the Windows 10 to 11 refresh that is happening because the Windows 10 support is going away, we will see that. But as of now, the trends that you see in terms of business growth is largely driven by the cloud consumption and the cloud demand this year.
Priya Rohira
Sure. This is very helpful, Mr. Just a small fallout on that. Would you say that you are more confident at the end or of Q3 or the start of CYO ’25 versus what you were at the start of the quarter, given the vibrancy you’re seeing across all the segments?
V.S. Hariharan
Can you repeat that question again, please? What is the exact question, sorry.
Priya Rohira
So Mr, what I’m trying to understand is that the start of CYO ’25, are you more confident than what you were seen at the start of the October quarter with respect to the demand upbeat since across all the verticals have participated in the growth?
V.S. Hariharan
Oh, absolutely, absolutely. And today, see, normally what happens in the year is our Q2 is driven largely by mobility because of NPIs. Q3 and Q4 is largely by technology solutions and cloud. But the coming year, we do see all of the business verticals cranking and like what I said, I think the mobility will continue because you will see AI-enabled smartphones tend to make a difference. So people refresh that faster. The technology solutions and cloud will continue to move because the cloud adoption and the AI enablement will make that grow. And I do expect the second-half of the year to be quite good on PCs based on the trends we see and the products that our OEMs are going to launch. The first-half may still be muted, but in the second-half, we see that. So FY ’25, we definitely see bullishness across all the verticals.
Priya Rohira
That’s very helpful, Mr. And Krishn, if you can just address on the free-cash flows, was this purely because of the working capital improvement and you would see normalization since it’s 35 to 40 days, which you mentioned. So that returning back to the positive free-cash flow?
S.V. Krishnan
Okay. So the first submission as I would normally make all-the-time, please look at free-cash flow over a longer period. Because of too many moving parts in this business and many of our — I mean the working capital metrics depend on how do the vendor behave, their product category behave in that market, et-cetera, there will be volatility in shorter periods. So to answer you, in short, I mean, there is a jump from the 25 days to 33 days. I mean, the end of September, we all know it’s not a normal working capital level, it was far low. That has moved up and that has resulted in the FCF being negative. And this is on-top of the INR3,000 crores if you recollect the free-cash flow-in Q2. The comfort that I can give you is if you look at the debt levels, debt levels are under tremendous control even at these growth rates.
Our gross debt to our equity is about 0.4 times. Net-debt to equity is about 0.2 times. That’s the way we are geared. And if the payment transaction gets consumated whenever it is, that’s going to have an added advantage in terms of this debt-equity ratio. So we are very well-positioned in terms of — in terms of, I mean fueling the growth without the balance sheet getting diluted.
Priya Rohira
Yeah, thanks,. This was very helpful and congratulations to the management team on a great quarter. Wish you all the best for CBY ’25.
S.V. Krishnan
Thank you, Priya.
Operator
Thank you. Next question comes from the line of Saurabh Dhole with True Beacon Investment Advisors. Please go-ahead.
Saurabh Dhole
Yes, sir. Thank you. Good morning. My question is with respect to the MSG segment and other verticals where you’re catering, where your end client is a retail individual. What I want to understand is that what proportion of the sales or what proportion of the distribution that happens in these verticals does — how — what proportion gets routed through Qom? And what is the impact on channel margins as well as the working capital requirements as compared to the traditional retail stores.
V.S. Hariharan
So if I can understand the questions again, one is the distribution of the business across the different verticals. That is one question. The second is the impact of coupon. Is that correct?
Saurabh Dhole
Yeah. Distribution of, let’s say, smartphones or let’s say PCs and other ancillaries. So where the end client is a retail — the retail individual and not a — an enterprise. So what proportion of the sales are you making to this particular customer and customer through Qom channels? And what is the impact on channel margins and working capital requirements when you compare that with your traditional retail stores?
V.S. Hariharan
Okay. So today, Welcomm is a really good growing segment and actually we do partner with the players in our logistics business to enable them and help them. So we have partnered with some of the QuickCom players. But in terms of actual sales of smartphones and PCs through the QuickCom channel, it’s just the beginning of that phase. It’s still groceries and electronics and there is — there is some catch-up happening there. There may be some small portion going through that, but it’s not big yet. In terms of margins, we have not really seen a — there is a differential margin between retail and quick commerce. As this segment grows, we’ll see if there is a — if there is a value-added there in terms of time of delivery and if there is an extra margin available or not. But today it is not the case.
Saurabh Dhole
Thank you. Got it you.
Operator
Thank you. Next question comes from the line of Payal Shah from PL Securities. Please go-ahead.
Payal Shah
Yeah, good morning. Thank you so much for the opportunity. I have two questions. First, like as we see — as you can see, there is a good growth in MSG segment. So just wanted to understand more on this segment, like can you share — can share which all brands do we have other than Apple in India as well as out of India?
V.S. Hariharan
So we don’t specifically get into brands, but we — I’ll just go through category-by-category. In the mobility segment, we play in — we play in premium brands. So just like Apple, we have brands like Motorola, we have brands like Google. So we play with premium brands. In the PC segment, we work with all brands, all the very well-known brands, whether it’s HP, Lenovo, Dell,. So we work with all the leading brands in the market. And within the PC category, we also work on a lot of emerging businesses, whether it is gaming, whether it is entertainment. So there’s a screens. So there’s a variety of different equipments, which have different brands that we work with in Middle-East Africa, we do Samsung displays, professional displays and we do surveillance. So we do a range of things. We almost have 400 brands in our portfolio.
When it comes to the Technology solutions Group, obviously, we work with all the leading server players, whether it’s Dell, HB Enterprise, Lenovo and many others. And similarly on storage, we work with leading players. We also have a very large set of brands on software that enable the technology solutions and servers. And then when it comes to cloud, we work with all the leading hyperscalers. So we are — we are pretty much — the total portfolio is about 400 brands. The top-20 brands contribute to more than 80% of our business. And then the next 50 brands contribute about 15% and then there are a few 100 brands that contribute to the last 5% of the business.
Payal Shah
Okay. That’s quite helpful. My next question is on the — so I just wanted to understand, can you give some more color on the large projects which you are working on and how much of that is completed?
V.S. Hariharan
So this is an ongoing thing. Every quarter, there are large deals. And just to answer an earlier question, I mentioned about data centers. So there are quite a few deals around data centers, around storage and around servers that we do every quarter. And again, sometimes some of these deals consumate once we won the deal in terms of fulfillment and collections in the same quarter, sometimes they spill-over one or two quarters. So it’s very hard to say which ones and we don’t normally share specific customer names, etc. But we have large deals which spill-over two, 3/4 and we have some of them right now going on, which is the backlog I talked about from Q3 to Q4. But we have some deals that get-in the same quarter or maybe the next quarter.
Payal Shah
Okay, that’s it from my side. Thank you so much.
S.V. Krishnan
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Aejas Lakhani with Unifi. Please go-ahead.
Aejas Lakhani
Yeah. Thanks for the opportunity again. You know, sir, I wanted to understand that if we look at the business in blocks of, let’s say, four to five years, the earlier part of say 2010 to 2014 had better enterprise demand, which helped margins, then the next block of five years had a higher consumer-centric demand. You know, last five years again have seen better enterprise demand. And Harisha, to your point that we are going to see AI mobility products incrementally increase in the years to come, is it fair to say then we’re again going to see a cycle of maybe consumer-centric demand being strong over the next block of a couple of years.
V.S. Hariharan
Yeah. So I see two types of demand ages. One, clearly, the value segment, the demand will continue. And where we see growth and that’s where we’re investing is software subscription growth both driven by cloud and AI. So we believe the — we need to invest more in cloud and AI on software as a subscription model. So that’s one growth we see and that is also drive nice margins. But we also need to put some stickiness and value-added services so that we are serving our brands and OEMs well and we are serving our resellers well when they are touching customers. And you’re absolutely right, the cycle on AI-enabled smartphones, AI-enabled PCs is a cycle that we see coming.
The question is what is the inflection point tipping point? There’s a lot of discussion around AI and there’s a lot of discussion around agentIQ AI. I think AI is going to happen both in our devices and in our servers and solutions we sell. So I would say early days in terms of PCs and smartphones, but definitely one cycle of demand is coming in the next one to two years and that will enable people having to change their smartphones and PCs because the same capability is not available in the previous operating system or the previous chip technology or the platform technology they own. So when it is real, when it is a game-changer, people will change. Clearly, all the discussions we have on the partner advisory boards with the OEMs and brands, there is a hell of lot of work that’s going on to change the game on how AI is used in these endpoint products.
Aejas Lakhani
Got it sir thank you and all the best.
Operator
Thank you. A reminder to all the participants that you may press star and 1 to ask a question. Once again, a reminder to all the participants that you may press star and 1 to ask a question.
Next question comes from the line of Nirmam with Unique PMS. Please go-ahead.
Nirmam Mehta
Yeah. Hi, sir. So sir, I’m a bit new to the business, so just wanted to understand a few points. So one was you mentioned some above-normal profitability in the cloud business. So can you explain a bit about the cloud business some — what are the different segments? And what do we as a distributor have a role there?
S.V. Krishnan
Okay. So within the cloud business, we — the large part of the business is the hyperscaler business. We work with AWS, Microsoft and Google. We also have a portfolio of software as a service in a few different verticals. Now this business, we do a resell largely using a subscription model using a digital platform. And the first part of the value chain is very basic in terms of purchase orders, sales orders, collections because when you’re working with a large number of mid-market and small enterprise customers, there is a lot of people you are touching and reaching and you need to make sure that you’re serving the customers through the resellers. So the brands and OEMs to look up to us to do this work for them.
The second part of the business in this cloud solutions is how do we enable consumption and workloads? When customers start consuming, they buy maybe a few licenses and then they start buying more and then we have a job to drive workloads and consumption by enabling new kinds of things for them, new solutions for them coming from ISVs coming from other third-parties. And that’s what drives volumes for our brands and OEMs are the hyperscalers. So driving consumption, driving workloads is second part of the job we do.
The third-part is professional services. So customers who are venturing into cloud look at how do I — first of all, they look at should I get-in the cloud, what part of it I should get into cloud. So there’s an assessment phase, there’s a migration phase, then people start looking at am I investing too much, how do I do the cost optimization? So there is a pin-offs, then there is modernization. Should I change my applications and then there is managed services. So what we do is we have competency to do a full plethora of professional services, but we partner with our ISVs and we partner with our resellers to bring all these capabilities to the customers from the brands. And since we are serving a large base of customers in the mid-market and small enterprise, the value brought by us as an intermediary on all of these things, whether it’s resell, whether it’s consumption or professional services is really valued by the brands and OEMs in a big way. Hope that happens.
Nirmam Mehta
Yes. So can you talk a bit more on the profitability part so how does this compare with the rest of our business?
V.S. Hariharan
Sure. So the typical gross margins for resell in the cloud business is 5% plus. And then when you drive consumption and workloads, specific programs that you bring to the table, you can get on the higher side, maybe 6%, 7%. And when you get into professional services, you can make margins 20% plus. So it’s a combination of these, these things, obviously, professional service is small and still growing. But clearly, if I look at the margin profile of the Cloud solutions business from a percentage perspective, it’s higher than the technology solutions today and it’s definitely higher than the PC group and quite higher than the mobility group. So the margin profile is definitely very interesting. We just need to grow this business faster and get more of the consumption driving consumption workloads and professional services because those are higher-margin parts of the business.
S.V. Krishnan
There is just working capital deployment in this business as there is no inventory that enables much better.
Nirmam Mehta
Yes, that is an added advantage. And so now overall our business, so we were entering some new geographies also. So any comments on that? There were some new focus markets there.
V.S. Hariharan
Okay. So we have been mentioning in the last few quarters that we are entering a few markets and we’re actually making progress. So South Africa is one market we’ve entered and we don’t share exact numbers, but definitely we are making progress every quarter. This quarter has been a good progress over the previous two quarters in South Africa. We’ve also entered over the last few quarters into Central Asia, into and Azer Paijan. And again, that’s a place we are making progress. We’ve also stated our intention to enter into some parts of ASEAN. So Singapore and Malaysia is another area that we are entering with more software and cloud focus and we are also making progress in that market.
Nirmam Mehta
Okay. Yeah, that’s it from my side. Thank you.
Operator
Thank you. A reminder to all the participants that you may please ask two questions. Thanks. Our next question comes from the line of Sahil Doshi with Thinqwise. Please go-ahead.
Sahil Doshi
Hi, sir. Good morning and congratulations on a fabulous set of numbers and execution. My question pertains to our — the client-wise data which we gave, if I see the top client possibly say Apple, you know, the pace of growth is actually lagging the company-level growth, at least in this Q3 as well as in the nine months. So is it showed that the direct share of Apple is actually increasing and we are losing some share? Or could you give some qualitative remarks with respect to what the trend is?
V.S. Hariharan
Could you repeat the first part of the question again, sorry, we couldn’t exactly follow the question.
Sahil Doshi
So if I was just seeing the revenue contribution from Apple, and if I see map the growth, for the first-nine months, the growth is 7% versus revenue growth of 9%. So quarter-by-quarter, the observation is that the pace of growth is this would become.
Operator
Mr. Joshish, sorry for interrupting. Can you please come in the range and talk because your voice is breaking.
Sahil Doshi
Sure. I hope I’m audible now and it’s much better.
Operator
Yes, go-ahead.
Sahil Doshi
Yes, sir. So my question pertains to Apple. I’m just seeing the pace of growth of Apple actually has been slowing down or not in sync with the revenue — the company-level growth. Just wanted to comment there that are we seeing some sort of a market-share erosion here or is the direct sales from Apple growing at much faster pace than what we are able to drive?
V.S. Hariharan
So let me try to answer the question in two-parts. When you — obviously, I guess you’re referring to the chart on-top five vendors and the mix between brands. And that changes partly because this quarter our — some of the brands in the technology solutions side and the other categories might have grown. So the portion of Apple might have gone down a little bit. So that happens every quarter. So you have to look at it over a period of a year or something like that. But specifically on Apple, no, we are not losing share. We measure on what is called as DTAM, what is distribution addressable market for us. And that’s what we are very focused on. Yes, Apple goes directly a number of channels, but within the DTAM, both in India and Middle-East Africa, we are not losing share.
Sahil Doshi
Sure, sir. But do we see direct share of business for brands growing at a much faster pace than the distributed business? Is that a trend which is seen in India or globally?
V.S. Hariharan
Not really. We are not seeing that. It sometimes changes when there are realignments on distribution strategy. But if I just take the last year, year and a half, we have not seen a lot of change on the BTAM versus the direct addressable market from the brands. There might be small changes, but nothing radical.
Sahil Doshi
Sure, sir. I appreciate that. And the second question is a follow-up on one of the previous questions on the gross margin. Now if I see on a Y-o-Y basis despite a favorable shift in terms of mix, we’ve seen some kind of a drop and we’ve also seen some benefit of provisioning write-back. So do we assume this to be a new normal in terms of the gross margin that we should operate at?
V.S. Hariharan
I think Krishnan answered this a little earlier. I think the technology solutions side, we see a bit of erosion of gross margin because of the higher component of bigger deals. We do see big deals coming in the next few quarters as well. So as the component of big deals versus the run-rate business goes up, we might see a little bit of trending in that direction, but we do look at return on capital employed as we take on these deals. So if they — they’ll definitely be good Rose deals even if the gross margin percentage goes on a little bit?
Sahil Doshi
Sure, sir. And just a last one, if I see renewable energy, which was a vertical which we just started focusing a couple of years back, possibly the last two, 3/4, we’ve seen the rate of growth has slowed down. Any possible reason for this and how do we look at this business going-forward?
V.S. Hariharan
Sure. So the solar business was largely a business that we were targeting rooftops. And there were changes in regulatory changes in the environment. The large part of the business is done with imported solar panels. And as the ALMM measures came in, we had to readjust our business model and partnering with local solar panel companies. We have done that. And we’ve also adjusted to the new Prime Minister program that was announced. So we’ve actually created now what is called as a Reddington solar franchise, it’s called the RSFC franchise that we have created and we are working with EPCs who want to be part of our franchisee model along with the Prime Minister program of subsidizing rooftops. We are actually quite optimistic about this. It will take some time to change the business model from a imported to a local and going into this franchisee model. But we — as we get into the next fiscal year, we do see the — our ability to play again in this market with the new business model quite strong.
Sahil Doshi
Sure, sir. Thank you so much and best of the team, sir. Thank you.
Operator
Thank you. Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Nikunj Mehta with Wealth Guardian. Please go-ahead.
Nikunj Mehta
Good morning, sir. My first question is regarding the rest of the world growth. In EBITDA — at EBITDA level, you have about 15% growth. And then at PAT level, the growth slowed down to about 4%. So what component exactly led to this slower-growth at PAT versus EBITDA level? Can you please tell us?
S.V. Krishnan
The key aspect is the interest, interest cost and there is an increase in depreciation in in Turkey because of the inflation index. These two have contributed for that and there would also be an increase in the tax-rate. This is what it was, say, last year. This had happened because of couple of factors. One, across Middle-East in various markets, taxes, the corporate tax had come in and we had been talking about at 23% to 25% as a steady-state, the weighted-average tax-rate. So we are at about that range now. And as we are on this subject, I can also tell you as we move forward into the next year, the tax-rate could further go up because GMT is also getting implemented global minimum tax in various markets. So I think a steady-state range should be between 25% to 26% from — I mean from next year. This is — these are the reasons, Nikunj, in terms of where we are vis-a-vis PAT and EBITDA.
Nikunj Mehta
Understood, sir. And can you give an update on ProConnect? What exactly is the strategy for the next couple of years there?
V.S. Hariharan
Okay. So first thing first, I think we have stabilized the operation on ProConnect. Over the last four quarters, you would have seen that our profitability has been quite consistent and predictable. We made sure that the customers we serve beyond Reddington, we understand we have a clear value proposition and we are getting the right pricing, et-cetera. Within the space of logistics, we have decided to focus in a big way on integrated logistics. So anything to do with pure freight and pure warehousing is not our target.
Our target is to deliver on integrated logistics and wherever we can do some good solutioning. The team is actually working through where have we succeeded in the last 10 years in the past and what’s our clear value proposition. So areas on integrated logistics across the country, specific models when we bring solutioning, including things like mission-critical, et-cetera. There are some specific target areas is where we are headed. We want to make sure that we are driving profitable growth rather than take growth for growth sake on the logistics side.
Nikunj Mehta
Okay, sir. Thank you so much. And just one thing, should we get the sale of that subsidiary closed in Q4 or is it going to get extended towards Q1?
S.V. Krishnan
We are keeping our fingers crossed. We also wish it will get done by this quarter. We are very confident. Let’s see. See, since these are regulatory things, things, Nikunsh. We can’t answer this with certainty, but our expectation is this quarter.
Nikunj Mehta
Appreciate, sir. Thank you so much and wish you all the best.
S.V. Krishnan
Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
V.S. Hariharan
Thank you. Thanks for all the questions and hope it was helpful. Thank you again for listening-in and we look-forward to delivering good results for the coming quarter and we’ll keep you informed as the Analyst meeting gets firmed up as we get closer and look-forward to seeing you all-in person. Thank you. Have a good day.
S.V. Krishnan
Thank you.
Operator
Thank you. On behalf of Indian Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.