MPS Infotecnics Limited (NSEI:VISESHINFO), is a INR₹188.72M small-cap, which operates in the software industry based in India. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition. Tech analysts are forecasting for the entire software tech industry, a strong double-digit growth of 18.37% in the upcoming year , and a robust short-term growth of 18.54% over the next couple of years. This rate is larger than 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 MPS Infotecnics is a laggard or leader relative to its tech sector peers. Check out our latest analysis for MPS Infotecnics

What’s the catalyst for MPS Infotecnics’s sector growth?

US-based mega-competitors, such as Alphabet, Apple and Facebook, have been and appears to continue to be, the key drivers of industry growth. Many tech companies are repositioning themselves by focusing on high-growth areas such as IBM’s artificial intelligence play in Watson and Adobe’s shift to marketing its product for cloud computing. In the past year, the industry delivered growth in the teens, beating the Indian market growth of 12.74%. MPS Infotecnics lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means MPS Infotecnics may be trading cheaper than its peers.

Is MPS Infotecnics and the sector relatively cheap?

The software tech industry is trading at a PE ratio of 19x, lower than the rest of the Indian stock market PE of 26x. This illustrates a somewhat under-priced sector compared to the rest of the market. Though, the industry returned a similar 11.10% on equities compared to the market’s 9.88%. Since MPS Infotecnics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge MPS Infotecnics’s value is to assume the stock should be relatively in-line with its industry.

What this means for you:

Are you a shareholder? MPS Infotecnics has been a tech industry laggard in the past year. If your initial investment thesis is around the growth prospects of MPS Infotecnics, there are other tech companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how MPS Infotecnics fits into your wider portfolio and the opportunity cost of holding onto the stock.