Infinite Computer Solutions (India) Limited (NSE:INFINITE), is a ₹14.88b small-cap, which operates in the IT services industry based in India. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition from traditional and emerging areas. Innovations such as augmented and virtual reality, blockchain, machine learning and autonomous vehicles are paving the way for tech sector growth and branching out into new applications. However, more specifically in the IT service industry, tech analysts are forecasting a strong double-digit growth of 16.61% in the upcoming year , and a massive growth of 44.26% over the next couple of years. However this rate still came in below the growth rate of the Indian stock market as a whole. Is now the right time to pick up some shares in tech companies? In this article, I’ll take you through the tech sector growth expectations, and also determine whether Infinite Computer Solutions (India) is a laggard or leader relative to its tech sector peers.
What’s the catalyst for Infinite Computer Solutions (India)’s sector growth?
Despite all the opportunities, tech companies still face a host of challenges, including coping with an increasingly burdensome global regulation. Since the regulatory environment is unlikely to become less complex, organizations will need to address the constantly evolving rules for governing privacy, security and handling of data, as well as cybersecurity issues. In the past year, the industry delivered growth of 7.83%, though still underperforming the wider Indian stock market. Infinite Computer Solutions (India) lags the pack with its negative growth rate of -7.60% over the past year, which indicates the company has been growing at a slower pace than its IT services peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 36.01% in the upcoming year. This future growth may make Infinite Computer Solutions (India) a more expensive stock relative to its peers.
Is Infinite Computer Solutions (India) and the sector relatively cheap?
IT services companies are typically trading at a PE of 17.47x, in-line with the Indian stock market PE of 20.93x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 13.20% compared to the market’s 9.71%, potentially illustrative of past tailwinds. On the stock-level, Infinite Computer Solutions (India) is trading at a PE ratio of 13.22x, which is relatively in-line with the average IT services stock. In terms of returns, Infinite Computer Solutions (India) generated 11.34% in the past year, which is 1.85% below the IT services sector.
Infinite Computer Solutions (India)’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Infinite Computer Solutions (India) has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Infinite Computer Solutions (India)’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has INFINITE’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Infinite Computer Solutions (India)? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.