Best Semiconductor Stocks in India 2024: Invest in Tech's Bright Future

The semiconductor sector has seen remarkable growth due to the rise of electric vehicles and the rollout of 5G technology. Semiconductors play a crucial role in electric motors, telecommunications infrastructure, and various everyday electronic devices. Therefore, considering investments in top semiconductor companies in India could be a promising idea. The convergence of artificial intelligence with semiconductor manufacturing is driving a transformative journey, powering technologies from smartphones to autonomous vehicles. This article will discuss a list of semiconductor stocks, explaining what semiconductor stocks are, their characteristics, how to choose them, and more.

What Is A Semiconductor?

Semiconductors, small chips essential for powering electrical devices, are integral to a wide array of electronic gadgets. These include computers, gaming consoles, smartphones, electric vehicles, and medical equipment, all of which rely on semiconductor technology to regulate energy flow. Beyond consumer goods like rice cookers and air conditioners, semiconductors also play a crucial role in industrial machinery such as railways, ATMs, and various infrastructure components. Here are some Best Semiconductor Stocks in India to invest 2024.

Tata Elxsi Ltd

Tata Elxsi, founded in 1989, specializes in designing and developing computer software and hardware. The company operates across two main segments: system integration and support, and software development and services.

Currently, Tata Elxsi has a market capitalization of Rs. 46,054.67 crore. Over the past 5 years, the stock has demonstrated a strong compounded annual growth rate (CAGR) of 50.73%. It is noted for being 2.19 times more volatile than the Nifty index.

According to Tickertape's Scorecard, Tata Elxsi achieves a solid profitability score of 8.2 out of 10, highlighting its strong profitability and operational efficiency. Despite being considered overpriced, there are no major concerns or red flags associated with the stock. This highlights Tata Elxsi's position among the best semiconductor stocks in India.

MIC Electronics Ltd

Established in 1988, MIC Electronics specializes in manufacturing electric lighting equipment. The company has a market capitalization of Rs. 1,068.48 crore, reflecting its position in the industry as one of the Best semiconductor stocks in India.

MIC Electronics' stock exhibits high volatility, being 5.93 times more volatile than the Nifty index. This volatility indicates fluctuations in the stock's price movements compared to the broader market index.

According to the Tickertape Scorecard, MIC Electronics has received average scores for growth and profitability. This suggests moderate performance in terms of both expanding its business and generating profits.

Looking ahead, investors may consider monitoring MIC Electronics' strategic initiatives and market developments to gauge its potential for growth and stability in the dynamic electric lighting equipment sector.

Tejas Network

Tejas Networks specializes in designing and manufacturing wireless network products and recently established Saankhya Labs in 2024, focusing on developing a system-on-chip for 5G telecom infrastructure. It operates as part of the Tata Group through Panatone Finvest Ltd. Here's an overview of the company's current fundamentals:

The company's profitability is currently impacted by its investment phase, resulting in a low return on equity. Over the past decade, Tejas Networks has achieved a compounded annual sales growth rate of 19%, indicating steady expansion in its business operations.

Regarding financial leverage, Tejas Networks had no debt as of FY23 but has since taken on Rs. 1,744 crores in debt as of March 31, 2024, aimed at funding its expansion initiatives. The manageable debt level is supported by its affiliation with the reliable Tata Group.

In terms of valuation, Tejas Networks is trading at a price-to-earnings (PE) ratio of 313 as of May 2024, significantly higher than its 5-year median of 45.7x. This premium valuation reflects investor optimism about the company's future prospects, particularly in the burgeoning 5G technology sector.

Investors considering semiconductor stocks in India should monitor Tejas Networks closely for potential entry points, as the current high valuation suggests waiting for a more favorable price level before making investment decisions.

Dixon Technologies (India) Ltd

Dixon Technologies, a domestically rooted manufacturing company, specializes in offering electronic manufacturing services (EMS) across multiple sectors. These include electronics, home appliances, lighting products, mobile phones, and more, positioning itself among the best semiconductor stocks in India.

With a net profit margin of 2.07%, Dixon Technologies demonstrates its ability to efficiently convert revenue into profits. The company's return on equity (ROE) stands at 22.31%, highlighting its effective utilization of shareholder equity to generate earnings and create value.

Beyond its core services, Dixon Technologies is known for its contributions to India's manufacturing landscape, embodying resilience and innovation in a competitive market. The company's strategic positioning and robust operational capabilities underscore its role as a key player in the electronics manufacturing sector.

Continuing to expand its technological capabilities and market presence, Dixon Technologies remains pivotal in driving growth and fostering technological advancements within the industry. Investors and stakeholders alike monitor its performance and strategic initiatives closely, recognizing its potential in shaping the future of electronic manufacturing in India.

Moschip Technologies Ltd

This Indian company operates under a fabless semiconductor model, with a strong focus on Internet of Things/Everything (IoT/E) manufacturing, making it one of the best semiconductor stocks in India. They excel in providing comprehensive product design and development services, specializing in chip design and system development.

With a net profit margin of 3.33% and a return on equity (ROE) of 6.95%, the company demonstrates its capability to generate profits relative to its revenue and effectively utilize shareholder equity to drive earnings.

Beyond their financial metrics, the company's expertise in semiconductor and IoT/E technologies positions them at the forefront of innovation in the industry. Their commitment to product design and system development underscores their role in advancing technological solutions and addressing market demands.

Continuing to leverage their fabless semiconductor model and expertise in IoT/E, the company remains poised for growth in the evolving landscape of semiconductor manufacturing and connected technologies. Investors and industry observers keenly watch their strategic advancements and market penetration as they navigate opportunities in a competitive global market.

Final Words

Investing in semiconductor stocks in India presents a promising opportunity amid rapid technological advancements and increasing global demand. Companies in this sector are pivotal in driving innovations across various industries, from telecommunications to automotive and beyond.

Indian semiconductor firms, whether established leaders or emerging innovators, are capitalizing on trends like artificial intelligence, 5G technology, and the Internet of Things (IoT). Their contributions are not only shaping technological landscapes but also fueling economic growth.

Investors interested in this sector should assess factors such as financial stability, technological capabilities, and market positioning of each company. While the potential for growth is evident, prudent investment decisions require careful consideration of valuation metrics, profitability trends, and broader market conditions.

Staying informed about industry developments and monitoring company strategies will be essential in navigating the dynamic landscape of semiconductor stocks in India. By doing so, investors can position themselves to benefit from the sector's growth potential and contribute to India's evolving role in global technology markets.

FAQs

Q. What is the outlook for semiconductors in 2024?

A. 2024 is now predicted to see global sales of US$588 billion. Not only would that be 13% better than 2023, but it's 2.5% higher than 2022's record industry revenues of US$574 billion. As is so often the case, the memory chip market was the biggest swing factor.

Q. Which company will build semiconductors in India?

A. Amid all this, the Union Cabinet on February 29 approved the country's first semiconductor fab to be set up by the Tata Group in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corp (PSMC).

Q. Which Tata company is going to make semiconductors?

A. With this announcement, Tata Electronics enters the global semiconductor industry. Tata Electronics (a wholly owned subsidiary of Tata Sons Pvt. Ltd.) in partnership with Powerchip Semiconductor Manufacturing Corporation (PSMC) will build India's first AI-enabled state-of-the-art Fab.

Q. Is Tata Elxsi into semiconductor?

A. Tata Elxsi, a key player in the semiconductor industry, has been at the forefront of semiconductor chip manufacturing in India. The company's semiconductor plant and manufacturing processes have played a pivotal role in achieving this milestone.

Q. Are semiconductors a good investment?

A. Semiconductor ETFs were among the top-performing exchange-traded funds of 2023 and continue to be market leaders in 2024, as the largest fund in the category, the VanEck Semiconductor ETF (SMH), is up 40% this year.