Top 5 Semiconductor Stocks in India

The world is expanding in many ‘non-literal’ ways, especially in terms of technology. Technology was running the world when even when we were going through lock-down, quarantine & WFH. 

But the thing is, we can harness the technological advancements only through products such as electric cars, smartphones, smart TVs and even not so fancy items like a refrigerator, washing machines and more. The fun fact is, that there is a component that is common in the manufacturing of all these products, and that product is semiconductor chips.

These chips have become a great deal for many reasons that we will be discussing in the blog. We will take a look at what precisely are these semiconductor chips, what does its future prospects look like and the stocks that are actively engaged in spaces that require these chips or are involved in manufacturing them. So, Let’s get started. 

Semiconductor Industry Overview 

You must have heard about the semiconductor shortage and how semiconductors are a big deal for so many industries. But what is a semiconductor in the first place? In a scientific sense, the semiconductor is a device made to manage the flow of electricity in various appliances. It is found in many electronic products such as computers, smartphones, gaming hardware, medical equipment and even EVs. It might be hard and too technical to understand how these chips work.

But just so you know, temperature sensors used in ACs are made with semiconductors; these chips control temperatures in rice cookers, they are used in the manufacture of CPUs for personal computers. They are utilised not only in consumer electronics but the chips play a key role in the operations of ATMs, trains and other social infrastructures. 

Not only this, as far as EVs are concerned, a standard one requires hundreds of semiconductor chips. The problem arose when the whole world faced a semiconductor chips shortage. There were many reasons that contributed to this such as the global pandemic, the ongoing war, trade war and more. These chips have become more important over the years.

According to Deloitte, in 2022, the global semiconductor chip industry is expected to reach about USD 600 billion. Also, the chip shortage over the last two years has resulted in a revenue loss of more than USD 500 billion. 

These chips are expected to become more important across different industries because their use is increasing in various products. The supply shortage is expected to remain intact, but additional semiconductor manufacturing facilities are expected to build across the globe.   

The development of artificial intelligence, the internet of things, and related fields have sparked semiconductor demand in the world.

Below is a graph depicting the market size by component type. 

Without waiting further let’s take a look at the semiconductor stocks in India. 

Top 5 Semiconductor Stocks in India

Without further ado, let's begin the list of the best:

1. Tata Elxsi

Tata Elxsi was incorporated in 1989. It provides design & technology services to several consumers such as Automotive, Broadcast, Communications, Healthcare and more. The company is in the business of semiconductor services that includes AI tools and framework, SDK & Reference design solutions, Functional safety, multimedia reference framework, FPGA design & development. 

As far as the company's strengths are concerned, it is virtually debt-free; the company has a good ROE track record of 40.97%. The company also has a healthy operating margin of 30.53%.

Above is a chart depicting a 1-year CAGR return showing a wondrous 30.6% return in the price chart.

2. ASM Technologies

ASM Technologies is a global company established in 1992. The services offered by the company are Product life cycle, Internet of things, engineering services and more. 

ASM has years of experience in serving reputed semiconductor manufacturing companies.  As far as the strengths are concerned, the company is trading at a PE of 43.91. It also maintains a healthy dividend yield of 5.27%. The company has delivered average profit growth of 51.52%.

Just look at the sudden hike with the beginning of 2024 in the company's price chart. It's whopping CAGR return of 132.8% in a year speaks for itself.

3. Dixon Technology

The company was incorporated in 1993. It is an electronics manufacturing service provider. It manufactures consumer durables; to be precise, the company offers LED TVs, mobile phones, washing machines, CCTV security units and more.

As far as strengths and weaknesses are concerned, the company has shown a good profit growth of 38.66% over the past 3 years along with revenue growth of 36.93%. The ROE and ROCE that the company has been maintaining over the last 3 years are 22.60% & 30.83%, respectively. On the flip side, it is trading at a very high PE of 159.95. 

Above is a chart depicting a 1-year CAGR return. Dive into detailed analysis of Dixon technologies by checking out its research report.

4. SPEL Semiconductor Ltd.

SPEL Semiconductor was established in 1988. It is India’s first & only semiconductor IC assembly & test facility.  As far as the strengths and weaknesses of the company are concerned, it has an efficient cash conversion cycle of 85.20 days. It also has a high promoter holding of 59.17%. The company has a strong degree of operating leverage. On the flip side, the company has shown a poor profit growth of -0.65% also the revenue growth has been poor. 

268.8% CAGR Return in just 1 year. This stock has proved to be a gem in the semiconductor industry.

5. Moschip Technologies Ltd.

 It was founded in 1999 as an Indian semiconductor company. They provide vendors & OEM suppliers support for their broad product range. 

As far as strengths & weaknesses are concerned, profit growth CAGR for three years remained at 22.65%. Also, the company has delivered good income growth over the past 3 years. On the flip side, Company has a poor ROE of -23.12%, along with a poor ROCE of -8.11% over the last 3 years. 

Above is a chart depicting 1-year CAGR return.

The Bottom Line

That was all about semiconductors and their stocks but if you want to analyse other stocks we give you INVESTING KA SEARCH ENGINE, Finology Ticker. Where we give you tools based on Stock Analysis, Peer Comparision, Stock Bundles and many more.

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*Disclaimer: The stocks and companies discussed above aren't a recommendation from Finology Insider and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.