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BLS International Services Limited (NSE:BLS), is a ₹18.84b small-cap, which operates in the IT services industry based in India. In the past decade, mega-tech companies, have built highly successful and ubiquitous platforms and ecosystem in which smaller companies gravitate towards. However, more specifically in the IT service industry, tech analysts are forecasting a positive double-digit growth of 15.12% in the upcoming year , and a massive growth of 59.48% over the next couple of years. However this rate still came in below the growth rate of the Indian stock market as a whole. Today, I’ll take you through the tech sector growth expectations, and also determine whether BLS International Services is a laggard or leader relative to its tech sector peers.
See our latest analysis for BLS International Services
What’s the catalyst for BLS International Services’s sector growth?
Many technologies are now coming into their own as their power and speed increase and the cost of delivering them goes down. In the previous year, the industry saw growth in the teens, though still underperforming the wider Indian stock market. BLS International Services leads the pack with its impressive earnings growth of 93.24% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with BLS International Services poised to deliver a 24.37% growth over the next couple of years compared to the industry’s 15.12%. This growth may make BLS International Services a more expensive stock relative to its peers.
Is BLS International Services and the sector relatively cheap?
The IT services sector’s PE is currently hovering around 17.89x, relatively similar to the rest of the Indian stock market PE of 21.46x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 12.63% compared to the market’s 9.84%, potentially illustrative of past tailwinds. On the stock-level, BLS International Services is trading at a PE ratio of 19.52x, which is relatively in-line with the average IT services stock. In terms of returns, BLS International Services generated 37.04% in the past year, which is 24.41% over the IT services sector.
Next Steps:
BLS International Services’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 BLS International Services 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 BLS International Services’s fundamentals in order to build a holistic investment thesis.