he semiconductor industry in India is a solid choice if you are looking for a growing market. Many shareholders of connected companies are betting on future profits from India’s booming semiconductor industry. And that’s why we will discuss some of the best semiconductor stocks in India, key factors to consider when investing, and frequently asked questions.
The source predicts a CAGR (Compound Annual Growth) of 13.7% for the expansion of the semiconductor industry by 2033. Growing demand for consumer electronics, AI, IoT and the automotive industry is driving the industry’s growth. This makes it one of the fastest-growing sectors globally. The government has launched a PLI plan to strengthen the semiconductor sector. That said, we would like to recommend some of the best semiconductor stocks in India.
However, before listing major semiconductor stocks in India, it is essential to understand the Indian semiconductor stock market. Below is a detailed discussion of the future of the semiconductor market and the investments made to improve it.
Considerations before choosing semiconductor stocks in India
Investing in a premium stock can be a difficult decision. Please evaluate key factors before investing to avoid losses.
- Observe if the company’s revenue increases. You must be able to convert revenue into profit. It would help if you considered investing in companies with good profit margins. Companies with high margins can also reinvest in R&D to improve and facilitate their operations.
- Although the government is working tirelessly to turn India into a global semiconductor hub, the ecosystem will take some time to develop, maintain and grow. In these cases, companies spend a lot of resources on research and operations, increasing costs and limiting profits. Therefore, it is recommended to invest with a long-term view.
A company’s return on invested capital (ROIC) represents its ability to generate a return on raised debt/equity. A high ROIC indicates that investing in a particular stock can be a good investment. So choose a semiconductor company with a high return on investment.
- The company’s finances must be healthy. Review balance sheets, income statements, annual reports, cash flow statements and other important documents to analyse past and present business performance. This will give you clearer information and help you make the right investment decisions.
- The semiconductor industry is attractive due to its increasing market penetration and high growth potential. Investors should stick to a suitable plan, acquire background knowledge, consider their risk appetite, and invest accordingly.
Unsolicited recommendations, tips, and advice should not be taken at face value. Please consult a financial advisor if necessary. However, invest only after thorough independent research on semiconductor stocks.
Top Semiconductor Stocks in India
Here are some of the best semiconductor stocks in India:
1. Tata Elxsi . Co., Ltd
Tata Elxsi is engaged in designing and developing computer hardware and software. The company was founded in 1989 and is divided into two divisions:
Support and develop software, services, and system integration. Tata Elxsi has a market cap of 38,716 R cores. The stock’s one-year return is 1.68%, and the 5-year CAGR (compound annual growth rate) is 498.72%.
2. ASM Technology Co., Ltd
The company provides technical consulting, product research, engineering, and development services. Its services include automation solutions, the internet of Things, digital balance assessment, robotics and driver assistance systems. In 2022, the company achieved total sales of Rs. 192 crores. The stock has a P/E ratio of 42.41, EPS of 11.84, and earnings of 14.61 cores in 2022.
3. SPEL Semiconductor Co., Ltd
SPEL Semiconductor Co., Ltd. was established in 1984. It is a strong ally of several semiconductor suppliers and is considered trustworthy by many companies in the semiconductor industry. Furthermore, it is the only leading Indian company operating a test facility and a semiconductor integrated circuit assembly facility. As a result, it regularly appears in lists of India’s best semiconductor stocks. The company’s market capitalization is Rs. 232 core. The stock has a 1-year return of 25.57% and a 5-year CAGR (compound annual growth rate) of 179.01%.
4. Moschip Technology Co., Ltd
Moschip Technologies is a semiconductor and systems design company specializing in mixed-signal IP, turnkey ASICs, IoT solutions, semiconductors, and product development for medical, automotive, consumer electronics, networking, telecommunications, defence, and aerospace. The company was founded in 1999. Moschip Technologies has a market capitalization of Rs 1,154 crore. Its 1-year stock yield is -5.17%, with a 5-year CAGR (compound annual growth rate) of 60.16%.
5. Dixon Technology
The company was established in 1993. It is a service provider of manufacturing electronic products. It produces durable consumer goods, especially mobile phones, LED TVs, CCTV security equipment, washing machines and other items. In terms of strengths and weaknesses, the company has demonstrated good profit growth of 38.66% over the past three years and revenue growth of 36.93%. The company’s ROE (Return on equity) and ROCE(Return on Capital Evolved) for the past three years are 22.60% and 30.83%, respectively. On the other hand, it has a very high PE of 159.95.
India’s Semiconductor Initiative, driven by the Indian government’s Atma Nirbhar initiative in the Integrated Chips and semiconductor markets, has received an investment of Rs 76,000 to expand and improve the semiconductor manufacturing ecosystem in India.
Semiconductor stocks are popular with investors due to their history of consistently delivering returns. However, choosing stocks wisely can generate good returns in the future.