In This Article:
ICSA (India) Limited (NSEI:ICSA), is a IN₨168.97M small-cap, which operates in the software industry based in India. The past two decades have experienced unprecedented changes in technology, and the next decade looks equally drastic. Tech analysts are forecasting for the entire software tech industry, a positive double-digit growth of 24.23% in the upcoming year . Below, I will examine the sector growth prospects, and also determine whether ICSA (India) is a laggard or leader relative to its tech sector peers. Check out our latest analysis for ICSA (India)
What’s the catalyst for ICSA (India)’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. Over the past year, the industry saw growth of 4.39%, though still underperforming the wider Indian stock market. ICSA (India) 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 ICSA (India) may be trading cheaper than its peers.
Is ICSA (India) and the sector relatively cheap?
Software tech companies are typically trading at a PE of 19.42x, lower than the rest of the Indian stock market PE of 24.77x. 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 9.65%. Since ICSA (India)’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge ICSA (India)’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
ICSA (India) recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the tech industry. However, before you make a decision on the stock, I suggest you look at ICSA (India)’s fundamentals in order to build a holistic investment thesis.
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1. 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.
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2. Historical Track Record: What has ICSA’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.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ICSA (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 pass 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.