Best Semiconductor Stocks in India in September 2024 – Based on Net Margin

The Indian semiconductor market is set to soar to USD 55 billion by 2026, driven primarily by growth in smartphones and wearables, automotive components, and computers and data storage, which together will make up over 60% of the market. India currently holds a 1% share of the global semiconductor trade and contributes 0.5% to global semiconductor sales. Additionally, the Indian semiconductor industry plays a significant role in the global economy, representing around USD 2.3 trillion of the world’s GDP. Let us now look at the best semiconductor stocks in September 2024 based on the net margin.

Best Semiconductor Stocks in September 2024 Based on Net Margin

Note: The stocks have been sorted based on net margin and as of August 29, 2024

Overview of Best Semiconductor Stocks in India

1. Tata Elxsi Limited: Tata Elxsi provides integrated services from research and strategy to electronics and mechanical design, software development, validation, and deployment. It is supported by a network of design studios, global development centres, and offices worldwide. The company’s transportation business recorded a strong growth of 5.3% QoQ and 20.3% YoY in constant currency during Q1 FY25 and now accounts for more than 50% of its Software Development & Services business.

Key Metrics:

• Return on Equity (ROE): 34.5%
• Return on Capital Employed (ROCE): 42.7%

2. HCL Technologies Limited: Since its inception into the global landscape after its IPO in 1999, HCL Tech has focused on transformational outsourcing and offers an integrated portfolio of services, including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO.

During FY24, HCLTech successfully implemented specialised chips designed specifically to run AI workloads efficiently for faster throughput and power efficiencies. In addition, it is helping its semiconductor chip customers go to market faster by using AI for processes such as design, layout, porting, etc.

Key Metrics:

• ROE: 23.3%
• ROCE: 29.6%

3. RIR Power Electronics Ltd:RIR Power Electronics Ltd manufactures traditional semiconductor devices such as bridges, power modules, diodes, rectifiers, and thyristors. The company is setting up India’s first SiC power semiconductor plant in Odisha with a capex of ₹6,186 million.

Key Metrics:

• ROE: 14.7%
• ROCE: 13.3%

4. Moschip Technologies Ltd: Moschip Technologies Ltd is a semiconductor and system design company focusing on Turnkey ASICs, Mixed Signal IP, semiconductor and product engineering, and IoT solutions for aerospace and defence, consumer electronics, automotive, medical, networking, and telecommunications. During FY24, the company recorded a growth in total revenue to ₹297.14 crore, compared to ₹203.32 crore in FY23.

During Q1 FY2025, MosChip secured a ₹509.37 crore contract from the Centre for Development of Advanced Computing (CDAC). This contract involves the development of a high-performance computing (HPC) SoC (System on a Chip) using state-of-the-art 5nm (nanometer) technology,

Key Metrics:

• ROE: 5.17%
• ROCE: 6.62%

5. Vedanta Ltd: Vedanta Ltd is a diversified natural resource group engaged in exploring, extracting and processing minerals and oil & gas. The group engages in the exploration, production and sale of zinc, lead, silver, copper, aluminium, iron ore and oil & gas. During FY24, the company established Vedanta Semiconductors Private Limited and retained a 65% stake.

Key Metrics:

• ROE: 10.5%
• ROCE: 20.9%

Recent Trends in Semiconductor Market

• The Vedanta-Foxconn Joint Venture has decided to locate its semiconductor and display manufacturing facilities in the Dholera Special Investment Area.
• Reliance Industries and HCL Technologies are “independently ‘considering’ plans to buy a 30% equity investment each in semiconductor wafer fab applicant ISMC Analog.
• The Ministry of Electronics and Information Technology intends to invest US$ 1.25 billion to US$ 1.30 billion to rebuild and upgrade its semiconductor laboratory (SCL) in Mohali.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.