Best Semiconductor Stocks in India: There are various sectors that have come into the limelight in the last few years. One of them is the semiconductor industry. The reason could be attributed to the high demand and global shortage that is still ongoing worldwide.
In this article, we will look at the overview of the industry and the Best Semiconductor Stocks in India. Keep reading to find out!
The Semiconductor Industry – an Overview
The pandemic disrupted the global semiconductor industry. It led to a shortage of semiconductors worldwide. Despite the economic downturn, the global semiconductor industry remained resilient with revenue growth of 6.5% to reach the $440bn mark in 2020.
Semiconductors are components needed for manufacturing cars, televisions, refrigerators, washing machines, personal computers, laptops, mobiles, etc. Semiconductors play an important role in a variety of fields.
Currently, India imports almost all the semiconductors it needs. Its demand is estimated to reach around US$100 bn by 2025 from about US$24 bn in 2021. The investments in India’s semiconductor capacity are, expected to grow 4-fold in the next few decades.
To boost the industry, the government has passed a ₹76,000 crore ($10 billion) production-linked incentive (PLI) scheme for semiconductors, which will strengthen India’s manufacturing base in making semiconductor chips.
How Will PLI Scheme Help Semiconductor Industry?
India was facing an inadequate supply of semiconductor chips in the global market which has severely affected the supply of a number of goods such as cars, laptops, and phones.
To combat this, the Centre sanctioned ₹76,000 crores under the production-linked incentive (PLI) scheme, under which Rs.2.3 lakh crore of incentives will be given, to encourage the manufacturing of semiconductors within India.
How will it help the companies?
The primary goal of introducing the scheme is to create a semiconductor ecosystem in the country. It will provide financial assistance in form of subsidies to the manufacturers of semiconductors.
This will help them bring down their production costs. In turn, the companies will be encouraged to produce more as their profits will increase. It will also allow the companies to have additional capital in the hand during these uncertain times which can be utilized for other purposes.
How will it help the economy?
The move came when the global semiconductor industry was facing a crisis. The strategic timing will benefit the overall economy. In fact, the government estimates that the scheme will lead to the creation of 35,000 specialized jobs apart from 1 lakh indirect employment opportunities.
In addition to that, it could also generate investments to the tune of Rs 1.7 lakh crore.
Best Semiconductor Stocks in India
Here are the best companies and top semiconductor stocks in India:
Best Semiconductor Stocks in India #1 – Vedanta Limited
| Face Value (₹): 1 | Net Profit Margin: 17.86 |
| Market Cap (Cr):₹100,290 | Current Ratio:1.04 |
| Promoter’s Holdings (%):69.7 | Debt to Equity:0.98 |
| Stock P/E (TTM): 6.92 | ROE (%): 37.23 |
| EPS (₹): 38.99 | Dividend Yield (%): 11.15 |
Vedanta Limited, formerly known as Sterlite Industries, is an Indian multinational mining company. It is one of the world’s leading Oil & Gas and Metals companies with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, and Aluminium & Power across India, South Africa, and Namibia.
They recently announced that the company in partnership with Foxconn will set up a semiconductor manufacturing plant in the next two years. This comes as a second attempt of Vedanta to enter the semiconductor space after its earlier plan to set up a display unit with about Rs 60,000 crore investment could not take off.
In FY22, the company recorded sales of Rs 132,732 Cr. In the same years, the company also posted a net profit of Rs 23,710 Cr, an increase of Rs 8,678 Cr compared to FY21. Apart from that, the company has been paying high dividends and thus has a rising dividend yield. The company has a high debt-to-equity ratio of 1.09.
Best Semiconductor Stocks in India #2 – ASM Technologies Ltd
| Face Value (₹): 10 | Net Profit Margin: 7.27 |
| Market Cap (Cr): ₹457.49Cr | Current Ratio: 1.39 |
| Promoter’s Holdings (%): 62.5% | Debt to Equity: 0.69 |
| Stock P/E (TTM): 41.94 | ROE (%): 22.7 |
| EPS (₹): 9.97 | Dividend Yield (%): 1.49 |
ASM Technologies Ltd is an India-based holding company. The company serves the market of India, Singapore, the US, the UK, the Middle East, and Japan. ASM has the expertise and understanding of the design and development of System and Sub Systems of PVD, CVD, RTP, Etch, CMP, and Inspection tools.
In their semiconductor business, it is in the process of developing a Modular Transfer Chamber (MTC) to enhance the productivity of packaging and a Vaccum Cassette Unit to carry wafers in a vacuum environment.
The main clients of the company include reputed customers involved in the manufacturing of semiconductor equipment and network devices. It is in the process of expanding its service offerings and has recently forayed into areas of virtual reality (VR), the Internet of things (IoT), and open edX platform management.
The fundamentals of the company are growing as they recorded a net profit of Rs 14 Crore in FY22 which was up by 55.5% from the same period last year. It earned a revenue of Rs 192 Cr.
The promoter’s holdings stand at 62.5% with Zero shares pledged. The Company has seen growing costs YoY for long-term projects which can be a reason for concern.
Best Semiconductor Stocks in India #3 – Moschip Technologies Ltd
| Face Value (₹): 2 | Net Profit Margin: 4.37 |
| Market Cap (Cr): ₹1,046Cr | Current Ratio: 0.84 |
| Promoter’s Holdings (%): 55.15 % | Debt to Equity: 0.98 |
| Stock P/E (TTM): 183.56 | ROE (%): 11.77 |
| EPS (₹): 0.35 | Dividend Yield (%): 0 |
MosChip Semiconductor Technology is the first Fabless Semiconductor company publicly traded in India. It specializes in product design and development services ranging from Chip Design to Systems Development.
It has a presence in sectors like aerospace and defense, consumer electronics, audio and video, networking and telecommunications, mobile electronics, security, and software development.
The company is focused on Semiconductor design services, Mixed Signal IP, Turn-key ASIC solutions, and Embedded product design services.
It has designed and developed 20+ different products in connectivity and shipped more than 10 million chips to its clients including Toshiba, Hitachi, Sony, IBM, and Volvo. It is also engaged in the business of Sales to External Customers.
Moschip earned a revenue of Rs 148Cr in FY22 and posted a net profit of Rs 6 Crores. Some of the red flags are the decrease in Promoter shareholding over the quarters and a High PE ratio with Negative 3yr Return on Equity (ROE).
On the bright side, the company has been able to generate strong cash flow from its core business over the last 2 years and the promoter pledge is Zero.
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Best Semiconductor Stocks in India #4 – SPEL Semiconductor Ltd
| Face Value (₹): 10 | Net Profit Margin: -75.33 |
| Market Cap (Cr): ₹183.59Cr | Current Ratio: 0.99 |
| Promoter’s Holdings (%): 59.2% | Debt to Equity: 0.52 |
| Stock P/E (TTM): 0 | ROE (%): -17.96 |
| EPS (₹): -2.11 | Dividend Yield (%): 0 |
Natronix’s India OSAT facility is SPEL Semiconductor Limited. It is engaged in offering electronic integrated circuits (ICs). SPEL is India’s first & only Semiconductor IC Assembly & Test Facility.
It provides full turnkey solutions that include Wafer sort, Assembly, Test, and Drop-shipment services which help Customers accelerate time-to-revenue for their new products.
They also offer packaging solutions for semiconductors used in a range of end-market applications, including communications, consumer electronics, computing, industrial and automotive. Its Customers are some of the biggest Integrated Device Manufacturers (IDMs) and Fabless Companies in the United States, Asia, and Europe.
The company earned a standalone revenue of Rs 15.65 Cr and reported a net loss of Rs 11.84 Cr in FY22. The company is seeing an increasing trend in earnings from its non-Core operations which can be a threat. On the other hand, the promoter’s holding accounted for 59.2% and with Zero Promoter Pledge.
Best Semiconductor Stocks in India #5 – RIR Power Electronics
| Face Value (₹): 10 | Net Profit Margin: 6.64 |
| Market Cap (Cr): ₹213.1Cr | Current Ratio: 1.14 |
| Promoter’s Holdings (%): 71.75% | Debt to Equity: 1.11 |
| Stock P/E (TTM): 37.37 | ROE (%): 11.67 |
| EPS (₹): 8.25 | Dividend Yield (%): 0.39 |
The Product range of the company includes Power semiconductors, Phase Control Thyristors, Standard Recovery Diodes, Fast Turn-Off Thyristors, Fast Recovery Diodes, and Power Modules (Thyristor/Thyristor, Diode/Diode, Diode/Thyristor), Bridge Rectifiers, and Water Cooled Assemblies.
It is a major supplier to manufacturers of Welding Rectifiers, Battery Chargers, and Electroplating rectifiers. The net profit of the company stood at Rs 2.81 Cr and revenue was at Rs 42.33 Cr for FY21.
The company has a very strong promoter holding summing up to 71.8% and Zero Promoter Pledge.
Best Semiconductor Stocks in India #6 – Tata Elxsi
| Face Value (₹): 10 | Net Profit Margin: 22.25 |
| Market Cap (Cr): ₹38,594Cr | Current Ratio: 4.13 |
| Promoter’s Holdings (%): 43.9% | Debt to Equity: 0 |
| Stock P/E (TTM): 54 | ROE (%): 37.2 |
| EPS (₹): 114 | Dividend Yield (%): 0.48 |
Tata Elxsi Ltd is the product design arm of the multi-billion Tata Group. It is amongst the world’s leading providers of design and technology services across industries including Automotive, Broadcast, Communications, Healthcare, and Transportation.
Last year the company showcased its ambitious plan to foray into the semiconductor manufacturing industry. The Tata group is in talks with the state governments of Tamil Nadu, Karnataka, and Telangana to invest US$300 Million to set up new semiconductor assembly and testing units.
The group is also in talks with major international companies, including those from Taiwan, for its semiconductor chip business.
On the financial front, Tata Elxsi earned Rs 2,471 Cr as revenue and Rs 550 Cr as revenue in FY22. The promoter’s holding is 43.9% and the promoter’s pledge is zero.
ALSO READ
List of all Semiconductor Stocks in India
| Company | Market Cap (Rs in Crores) |
|---|---|
| Vedanta Ltd. | 100,290 |
| Tata Elxsi Ltd. | 38,594 |
| Moschip Technologies Ltd. | 1,046 |
| ASM Technologies Ltd. | 457 |
| SPEL Semiconductor Ltd. | 183.59 |
| Ruttonsha International Rectifier Ltd. | 213.1 |
In closing
In this article, we looked at the Best Semiconductor Stocks in India. The use of semiconductors in various industries has increased its demand multifold over the last few years.
Adding to that, the high internet penetration and proliferation of smart devices are contributing to the semiconductor market growth. This can be a good opportunity for investors to invest in the sector. That’s all for this article. Happy Investing!
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