Vakrangee Limited (NSEI:VAKRANGEE), is a ₹163.96B mid-cap, which operates in the IT services industry based in India. Whether it’s the next big thing in tech or an alliance with a partner in another industry, tech companies have plenty of opportunities for their companies to thrive. However, more specifically in the IT service industry, tech analysts are forecasting a positive double-digit growth of 10.58% in the upcoming year . Today, I will analyse the industry outlook, and also determine whether Vakrangee is a laggard or leader relative to its tech sector peers. View our latest analysis for Vakrangee

What’s the catalyst for Vakrangee’s sector growth?

US-based mega-competitors have been, and 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 previous year, the industry saw growth of 7.84%, though still underperforming the wider Indian stock market. Vakrangee leads the pack with its impressive earnings growth of 54.82% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Vakrangee poised to deliver a 54.10% growth over the next couple of years compared to the industry’s 10.58%.

Is Vakrangee and the sector relatively cheap?

IT services companies are typically trading at a PE of 19.61x, lower than the rest of the Indian stock market PE of 25.3x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Furthermore, the industry returned a higher 15.15% compared to the market’s 9.65%, making it a potentially attractive sector. On the stock-level, Vakrangee is trading at a PE ratio of 21.67x, which is relatively in-line with the average tech stock. In terms of returns, Vakrangee generated 33.02% in the past year, which is 17.87% over the tech sector.

Next Steps:

Vakrangee’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 Vakrangee 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 Vakrangee’s fundamentals in order to build a holistic investment thesis.