What Can We Expect for Sify Technologies Limited (NASDAQ:SIFY) Moving Forward?
Sify Technologies Limited (NASDAQ:SIFY), a ₹268.00m small-cap, is a telco company operating in an industry which continues its transformation into the industry that is underpinning the digital and interconnected economy. Telco analysts are forecasting for the entire industry, a somewhat weaker growth of 4.11% in the upcoming year , and a strong near-term growth of 17.47% over the next couple of years. However, this rate came in below the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Sify Technologies is lagging or leading in the industry.
See our latest analysis for Sify Technologies
What’s the catalyst for Sify Technologies’s sector growth?
The convergence that has been talked about is now happening, but driven by disruption rather than well-considered strategies and marketing campaigns. Over the past year, the industry saw growth of 3.54%, though still underperforming the wider US stock market. Sify Technologies leads the pack with its impressive earnings growth of 37.46% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Sify Technologies poised to deliver a 45.21% growth over the next couple of years compared to the industry’s 4.11%. This growth may make Sify Technologies a more expensive stock relative to its peers.
Is Sify Technologies and the sector relatively cheap?
The telco industry is trading at a PE ratio of 15.25x, relatively similar to the rest of the US stock market PE of 18.22x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 11.91% on equities compared to the market’s 11.39%, potentially illustrative of a turnaround. On the stock-level, Sify Technologies is trading at a PE ratio of 18.81x, which is relatively in-line with the average telco stock. In terms of returns, Sify Technologies generated 10.55% in the past year, which is 1.36% below the telco sector.
Next Steps:
Sify Technologies’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 Sify Technologies 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 Sify Technologies’s fundamentals in order to build a holistic investment thesis.
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.
Historical Track Record: What has SIFY’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.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sify Technologies? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
