Top 5 Semiconductor stocks in India

31 Mar 2022  Read 32081 Views

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. The main components of a Semiconductor are Memory, Micro component, OSD, Logic & Analog. Below is a graph by PWC depicting the market growth by component type. 

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

 Top 5 Semiconductor stocks in India

Tata Elxsi

NSE: TATAELXSI

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 29.95%. The company also has a healthy operating margin of 28.67%. 

Below is a chart depicting a 1-year CAGR return.

ASM Technologies

BSE: 526433

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%.

Below is a chart depicting a 1-year CAGR return.

Dixon Technology

NSE: DIXON

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. 

Below is a chart depicting a 1-year CAGR return.

SPEL Semiconductor Ltd.

NSE: SPICELEC

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. 

Below is a chart depicting a 1-year CAGR return.

Moschip Technologies Ltd. 

BSE: 532407

 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. 

Below is a chart depicting 1-year CAGR return.

Conclusion

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

Also, Is there any topic you want a blog on or do you have any queries related to this blog? 

Then write us at support@finology.in 

We love it when you communicate with us. Do write in the comment section if you liked the blog.. :) Until then, Happy Investing.
 

*Disclaimer the stocks discussed above are here to make you understand the concept and are not the recommendations of Finology.  

About the Author: Ayushi Upadhyay | 234 Post(s)

A Keen Learner.
Passionate for Creative Writing & Finance!

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