One Point One Solutions Limited (NSEI:ONEPOINT), is a INR₹1.69B small-cap, which operates in the IT services industry based in India. The past two decades have experienced unprecedented changes in technology, and the next decade looks equally drastic. While mobile and cloud computing become ubiquitous, there is a new wave of advancement emerging from innovations such as machine learning, robotics and augmented reality. However, more specifically in the IT service industry, tech analysts are forecasting a somewhat weaker growth of 7.30% in the upcoming year , and a robust short-term growth of 16.53% over the next couple of years. This rate is larger than the growth rate of the Indian stock market as a whole. Should your portfolio be overweight in the tech sector at the moment? In this article, I’ll take you through the tech sector growth expectations, as well as evaluate whether One Point One Solutions is lagging or leading its competitors in the industry. Check out our latest analysis for One Point One Solutions
What’s the catalyst for One Point One Solutions’s sector growth?
The battle for competitive advantage has led businesses to adopt new the cutting-edge technology, or risk being left behind. Many technologies are now coming into their own as their power and speed increase and the cost of delivering them goes down. And some are pursing growth through various strategies including new M&A, collaboration and alliances, as well as cost reduction and organic growth. In the past year, the industry delivered growth of 8.05%, though still underperforming the wider Indian stock market. Given the lack of analyst consensus in One Point One Solutions’s outlook, we could potentially assume the stock’s growth rate broadly follows its IT services industry peers. This means it is an attractive growth stock relative to the wider Indian stock market.
Is One Point One Solutions and the sector relatively cheap?
The IT services industry is trading at a PE ratio of 19x, lower than the rest of the Indian stock market PE of 29x. This illustrates a somewhat under-priced sector compared to the rest of the market. Furthermore, the industry returned a higher 14.72% compared to the market’s 9.82%, making it a potentially attractive sector. On the stock-level, One Point One Solutions is trading at a lower PE ratio of 8x, making it cheaper than the average tech stock.
What this means for you:
Are you a shareholder? tech stocks are currently expected to grow slower than the average stock on the index. This means if you’re overweight in this sector, your portfolio will be tilted towards lower-growth. However, the sector is trading at a discount to the market, which may be reflective of the lower expected growth. If your investment thesis for One Point One Solutions hasn’t changed, now may be an opportune time to accumulate more shares in the tech stock.
Are you a potential investor? If you’ve been keeping an eye on the tech sector, now may be the right time to dive deeper into the stock-level. Although it is expected to deliver lower growth on an industry level relative to the rest of the market, it is also trading at a PE below the average stock. In the case that the market is overly pessimistic on the tech sector, there could be a mispricing opportunity to take advantage of.
For a deeper dive into One Point One Solutions’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other tech stocks instead? Use our free playform to see my list of over 1000 other tech companies trading on the market.