Indian semiconductor stocks and display industry stocks have become a hot topic in the investment community in recent years due to their rapid growth. As technology continues to advance and digitalization becomes the norm, the demand for the best semiconductor stock companies in India products is rapidly increasing. This makes semiconductor stocks a top choice for investors.
In this blog, we will cover everything you need to know about the Best Semiconductor stocks in India for the Long term and how to invest in them.
Important factors to consider before investing in Semiconductor Stocks
The application of semiconductor chip manufacturing companies in India’s stock market is on an upward trend and the field could present many good investment opportunities. But also like any venture, one needs to exercise a lot of caution when investing in any semiconductor stocks company. Let us discuss some important factors:
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Financial position of the company:
- Earnings Growth: One important sign is to ensure that the company is experiencing steady upward revenue growth. Positive revenue growth dynamics are indicative of future success.
- Profitability: Make sure that it is in a position to translate sales into profits.
- Analyze the Balance Sheet and Cash Flow: This will give you a clear indication of what the company’s financial situation is and its plan for the future.
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Industry Trend:
- Demand and Supply: This means the performance of the company could be greatly affected by variations in the demand and supply shocks in chips.
- Technological Advancement: It is a fairly dynamic field, which tends to undergo constant modifications. Select companies with higher expenditures on new technologies and better performers in terms of R&D investments.
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Risk:
- Volatility: Semiconductor stocks are usually highly volatile in response to changes in market forces. This means that given values can be changed very quickly.
- Competition: This field is highly competitive, and the number of new players seems to increase almost daily. Search for firms with high competitive forces within their respective industries.
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Long-Term Investment:
It costs a lot of money to establish a new semiconductor stocks fab which is also called a chip fab, as well as to develop new technology. However, it makes sense to build up interest in such firms with the long-term vision in mind.
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Do your research
However, it is advisable that before you embark on making any investment at all, you have to do some research on your own. Analyse the competitors and assess the financial performance and stability, key markets, and future outlook.
Top Semiconductor Stocks in India: –
List of the best semiconductor stocks to buy in India for long-term growth:
1. ASM Technologies Ltd
ASM Technologies Limited was founded in 1992 as an information technology (IT) consulting and software services company. The company provides marketing and business consulting, business solutions, application maintenance product support, etc. provides.
Financial performance:
- Market Cap: ₹ 1,101 Cr.
- Current Price: ₹ 1,004
- High / Low: ₹ 1,260 / ₹ 400
- Book Value: ₹ 129
- Dividend Yield:71%
- 5-yr CAGR: 88.31%.
Income Statement
- Revenue (TTM): ₹44.59 Cr (↓19.97%) (Significant revenue decline)
- Net Income (TTM): -₹3.39 Cr (Negative net income)
- Net Profit Margin (TTM): -7.60% (Negative net profit margin)
2. Tata Elxsi Ltd
Tata Elxsi was founded in 1989 and is involved in the design and development of computer software and hardware. The Tata Semiconductor Stocks company is divided into two groups: Collaboration & Support and Software Development & Services.
Financial performance:
- Market Cap: ₹ 41,881 Cr.
- Current Price: ₹ 6,725
- High / Low: ₹ 9,200 / ₹ 6,432
- P/E Ratio:8
- Book Value: ₹ 402
- Dividend Yield:85%
- CAGR over last 5 years: 22.4% (good profit growth)
- 3 Years ROE: 37.4%
- Dividend payout: 51.0%
Income Statement
- Revenue (TTM): ₹231.28 Cr (↑4.42%) (Modest revenue growth)
- Net Income (TTM): ₹29.83 Cr (↑7.46%) (Healthy net income growth)
- Net Profit Margin (TTM): 12.90% (↑2.95%) (Significant improvement in profitability)
3. Dixon Technologies (India) Ltd
This semiconductor share company was Established in 1993 as Weston Utilities Ltd. Dixon Technologies is a multinational manufacturer of consumer electronics such as washing machines, televisions, smartphones and LED lights.
Financial performance:
- Market Cap: ₹ 53,481 Cr
- Current Price: ₹ 8,940
- High/Low: ₹ 9,980 / ₹ 3,846
- P/E Ratio: 145
- Book Value: ₹ 283
- Dividend Yield: 0.03%
- CAGR over last 5 years: 42.3% (good profit growth)
- Sales growth of last 10 years: 15.7%
Income Statement
- Revenue (TTM): ₹4,657.97 Cr (↓3.33%) (Mixed performance, slight revenue decline)
- Net Income (TTM): ₹97.30 Cr (↑0.24%) (Modest net income growth)
- Net Profit Margin (TTM): 2.09% (↑3.98%) (Improved profitability despite revenue decline)
4. Moschip Technologies Ltd
Moschip Technologies Semiconductor Stocks was established in 1999, It is an electronics manufacturing and design company specializing in a variety of industries, including mixed-signal IP, turnkey ASICs, IoT solutions, semiconductors and products, automotive, medical, communications and telecommunications services, consumer electronics, aerospace and defence.
Financial performance:
- Market Cap: ₹2,832 Cr
- Current Price: ₹150 (as of June 4, 2024 2:30 PM IST)
- High: ₹176
- Low: ₹58.5
- P/E: 287
- Book Value: ₹14.3
- CAGR over last 5 years: 18.6% (good profit growth)
- Sales growth of last 10 years: 32.8%
5. Havells India Ltd
Havells India Ltd. is one of the leading electronics manufacturers in India, this best Semiconductor stocks was established in 1958. It specialises in manufacturing Fans, LED Lighting, Home Appliances, Water Heaters, Power Capacitors, Water Heaters Heater, Air Conditioners etc.
Financial Summary:
- Market Cap: ₹1,10,321 Cr
- Current Price: ₹1,760
- High: ₹1,987
- Low: ₹1,233
- P/E: 87.4
- Book Value: ₹119
- Dividend Yield: 0.47%
- Dividend Pay-out: 5%
Income Statement:
- Revenue: ₹5,442.02Cr (↑23.29%)
- Net Income: ₹446.70Cr (↑55.15%)
- Net Profit Margin: 8.21% (↑25.92%)
6. Polycab India Ltd
Polycab India Ltd Semiconductor Stocks is one of India’s largest and most trusted electronics companies. Founded in 1966, the company is engaged in the production and distribution of wires and cables, switches, fans, LED lights, solar products and other electronic products and other products. The company has many products under its brand such as Polycab, Wires & Cables, Wires & Cables, Polycab Fans, Polycab Wires & Cables, and Polycab Switches.
Financial Summary:
- Market Cap: ₹97,050 Cr
- Current Price: ₹6,459
- High: ₹7,116
- Low: ₹3,380
- P/E Ratio: 54.3
- Book Value: ₹545
- Dividend Yield: 0.28%
Income Statement:
- Revenue: ₹5,591.90Cr (↑28.83%)
- Net Income: ₹553.48Cr (↑32.89%)
- Net Profit Margin: 9.90% (↑3.13%)
7. Bharat Heavy Electricals Ltd
Bharat Heavy Electricals Ltd (BHEL) is India’s leading engineering and manufacturing company, established in 1964. It is among India’s largest engineering and manufacturing companies in the prestigious Fortune India 500 2020 list.
Financial Summary:
- Market Cap: ₹85,711 Cr
- Current Price: ₹246
- High: ₹322
- Low: ₹82.2
- P/E Ratio: 304
- Book Value: ₹70.2
- Dividend Yield: 0.15%
Income statement:
- Revenue: ₹7,883.88 Cr(↑49.50%)
- Net Income: ₹489.62 Cr(↑711.70%)
- Net Profit Margin: 6.21%(↑444.74%)
8. Honeywell Automation India Ltd
Honeywell Automation India Limited (HAIL) is a leading automation solutions company established in 1984. HAIL operates in India, the Middle East and Africa. It offers a wide range of products and services, including automation and control solutions, home and building solutions, safety and security solutions, and analytical control and problem-solving.
Financial Summary:
- Market Cap: ₹44,398 Cr
- Current Price: ₹50,224
- High: ₹59,050 / Low: ₹34,978
- P/E Ratio: 88.5
- Book Value: ₹4,079
- Dividend Yield: 0.19%
- Dividend pay-out: 20.1%
9. Apar Industries Ltd
Apar Industries Limited (AIL) Semiconductor Stocks is an Indian company that provides value-added products and services in the fields of energy, petroleum and allied industries. It is the world leader in the number of workers, the world’s fourth-largest producer of oil transformers, the largest producer of renewable energy and a leader in automotive fuel.
Financial Summary:
- Market Cap: ₹30,072 Cr
- Current Price: ₹7,486
- High: ₹8,399 / Low: ₹2,720
- P/E Ratio: 36.5
- Book Value: ₹965
- Dividend Yield: 0.46%
Income Statement:
- Revenue: ₹4,432.57 Cr(↑11.20%)
- Net Income: ₹236.22 Cr(↑8.57%)
- Net Profit Margin: 5.33%(↓2.38%)
10. V-Guard Industries Ltd
V-Guard Industries Ltd is an Indian electrical and electronics company established in 1977 by Kochouseph Chittilappilly. The company is headquartered in Kochi, Kerala and is headed by Managing Director Mithun Chittilappilly. V-Guard Industries Ltd is engaged in the manufacturing, distribution and servicing of a wide range of electrical and electronic equipment.
Financial Summary:
- Market Cap: ₹16,059 Cr
- Current Price: ₹370
- High: ₹394
- Low: ₹250
- P/E Ratio: 69.5
- Book Value: ₹40.7
- Dividend Yield: 0.35%
Income Statement
- Revenue (TTM): ₹1,342.77 Cr (↑15.22%) (Strong revenue growth)
- Net Income (TTM): ₹76.17 Cr (↑30.79%) (Significant net income growth)
- Net Profit Margin (TTM): 5.67% (↑13.40%) (Improving profitability)
Tips for Long-Term Growth: –
The size and importance of the semiconductor stocks industry are increasing year by year, so many investors tend to find good opportunities to invest in industries with high potential for long-term growth in their investments. Let’s see how you can maximize the long-term growth potential in semiconductor stocks:
1. Focus on Growth:
- Company Selection is also important to consider some general rules, such as looking for companies that demonstrate a tendency toward increasing, both in terms of revenue and profit. Those firms who are diversifying into new–products and new–market businesses are also likely to give a good account of themselves in the future.
- Let’s view businesses operating in high-growth sectors, like AI, IoT, or electric vehicles. The uses of chips in these domains are predicted to go high in the future.
2. Diversify:
- Avoid having all your attention focused on one or two firms. Invest in multiple semiconductor stocks companies that are placed in different segments of the value chain; they can be designers and developers of chips, manufacturers of wafers, or chip testers.
- It is also possible to directly invest in sector-based ETFs that focus on following the overall Semiconductors market. This means that it becomes very easy for you to diversify depending on what you are aiming for.
3. Take a long-term view:
Something also needs to be said about the cyclical nature of the semiconductor stocks industry – the industry has its ups and downs, or in other words recession and boom. However, if a long timeframe is used in the analysis, it can be seen that the industry slowly but steadily rises. Thus, it is necessary to work towards long-term planning and not get worked up over short-term volatility.
4. Reinvest dividends:
Most semiconductor stocks companies are profit-generating and paying entities that distribute dividends to their shareholders. Rather than this, you should reinvest these dividends to purchase more stocks of the firm. This will enable you to reinvest your gains and compound your income which in turn will help your investment to grow at a faster rate.
5. Seek professional advice:
From the analysis, it is clear that the semiconductor industry can be complex. For people with limited experience learning about the field, it can be useful to seek advice from a financial advisor who specializes in tech stocks.
Conclusion: –
The Indian semiconductor stocks industry started its growth only a decade ago and is predicted to grow strongly. That is why getting into this sector can be a good chance to make high profits in the long term. Still, it is wise to recommend conducting a proper analysis of the company’s financial statements, some tendencies in the selected industry, and possible future outlooks to invest in it. Diversify your investments and when investing focus on each one with a long-term in mind, and this lessens the risks that one is bound to encounter.
For more insights on short-term investment strategies, check out our comprehensive analysis of Top Shares to Buy for Short-Term Gains.
Disclaimer: The information provided in this blog is for informational purposes only and is not advice for investment. This means that you should seek advice from your financial advisor before making any investment.
FAQs
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What are some of the most important points to look at in semiconductor stocks?
- Company Financials: Specifically, seek those organizations that have been posting solid growth in their revenues and profits, high Operating Margins, great Balance Sheets and good cash flows.
- Industry Trends: Look at the entire global demand for semiconductors, the role of AI and IoT, as well as the support of the authorities for their semiconductor industry.
- Company Focus: Some companies have specializations as chip designers, chip manufacturers and testing service providers. Determine which segment is favourable for your investment plan.
- Risk Tolerance: Many semiconductor stocks may be particularly sensitive to fluctuations in the market. You should assess your risk tolerance before investing in a given stock.
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Is the Indian semiconductor industry as mature as needed?
The Indian semiconductor industry is in the developmental stage at the moment but the government pays much attention to developing domestic manufacturers. This is an ideal position for long-term growth.
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What are some of the risks associated with investing in semiconductor stocks?
- Cyclicality: The market fluctuates and goes through periods of extreme growth followed by stagnation, and changes in the economy can lead to changes in demand.
- Geopolitical Tensions: Interruption of the supply chain may occur due to trade wars or international conflict.
- Competition: The semiconductor industry is cutthroat all over the world due to increased technological advancements that are compulsory.
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Should I invest in a single company or diversify my portfolio?
Diversification is generally recommended. Choosing companies from different sectors or you can also opt for a sector-based ETF that covers all aspects of the semiconductor industry.
