In this blog, we will do a quantitative analysis of IT sector in India. India’s IT Industry contributed around 7.7% to the GDP and its contribution is expected to rise up to 10% by 2025. India is considered as largest sourcing destination for talented technicians in the world. Due to the pandemic, most of the organisations have adopted “Work From Home” structure and are relying more on IT services. Thus, IT spends across the globe are expected to increase over 2020-2024. This is one of the major reasons for the recent rally in IT stocks.
Please note that this analysis is done with the only purpose of screening good companies. Analysis done is completely on quantitative basis. No suggestions are being made to directly go and invest in the top scoring companies of this analysis. We suggest that one should perform a qualitative analysis of top scoring companies in this analysis and take investment decision based on risk profile.
Indian IT Sector Quantitative Analysis
Companies selected for analysis
We have selected the following five IT sector companies for our quantitative analysis.
Procedure of Analysis and its Interpretation
These 5 companies are analysed on following 8 parameters and given ranks and points accordingly. For example, if a company has higher PE ratio, it is ranked lower , hence has scored lesser points. Similarly, if a company has higher RoE, it is ranked higher and has scored higher points.
Here , 1 means that the company has scored lowest points and 5 means the company has scored highest points.
At the end, sum of all the points is taken and companies are again ranked on the basis of maximum points scored by each company.