In This Article:
Infomedia Press Limited (NSEI:INFOMEDIA), a IN₨182.71M small-cap, operates in the commercial services industry, which is faced with evolving conditions and potential further consolidation to gain market share. Commercial services analysts are forecasting for the entire industry, a highly optimistic growth of 42.40% in the upcoming year . Today, I will analyse the industry outlook, and also determine whether Infomedia Press is a laggard or leader relative to its service sector peers. Check out our latest analysis for Infomedia Press
What’s the catalyst for Infomedia Press’s sector growth?
A main driver of the industry has been the growing relevance of e-commerce for commercial services, enabling companies to reduce cost to serve while growing market presence at the same time. A crucial strategy for incumbents is to be well-positioned in response to the growing importance of stockless independent dealers, as well as building up their own capabilities around e-commerce. Over the past year, the industry saw growth of 6.39%, though still underperforming the wider Indian stock market. Infomedia Press 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 Infomedia Press may be trading cheaper than its peers.
Is Infomedia Press and the sector relatively cheap?
The commercial services sector’s PE is currently hovering around 37.15x, above the broader Indian stock market PE of 24.77x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 9.60% on equities compared to the market’s 9.65%. Since Infomedia Press’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Infomedia Press’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Infomedia Press 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 services industry. However, before you make a decision on the stock, I suggest you look at Infomedia Press’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 INFOMEDIA’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 Infomedia Press? 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.