Top 5 Semiconductor Stocks in India 2024

Technological innovations such as the electric vehicle (EV) revolution and the introduction of 5G are driving substantial development and transformation in the semiconductor sector. Since semiconductors are essential parts of many everyday electronic devices, electric cars, and telecommunications infrastructure, these advancements have raised the demand for semiconductors in the market. This rising demand is expected to have a positive impact on semiconductor stocks. In this article, we’ll provide a list of the top 5 semiconductor stocks in India, along with detailed insights into the semiconductor industry. Let’s get started!

Top 5 Semiconductor Stocks in India

Note: These semiconductor stocks' ranking is based on market capitalization. Please conduct a detailed analysis before investing. Metrics are recorded as of July 18, 2024, and may vary daily.

Best Semiconductor Stocks in India - Company Overview

Let's go through the company overview of top semiconductor stocks

1. HCL Technologies

HCL Tech is a Muti National company that began its operations in 1976. It began as an IT consulting company and later ventured into the software services segment. Currently, HCL operates in more than 60+ countries globally with more than 150 engineering labs.

The company has set up electronic chip plants in India under the ‘Scheme for Compound Semiconductors’, an initiative by the Indian government that provides incentives and other support to companies that manufacture Semiconductor chips. 

HCL has been working with top semiconductor companies like Intel, NXP, and Taiwan Semiconductor Manufacturing Company for chip production. It has set up a team of 2900+ engineers to oversee their operations services. 

The Company has reported a Revenue of Rs.1,09,913 Cores of which they retained a  Net profit of Rs.15,710 Crores as of FY 24. The Company shows a 5-year CAGR growth of 13% in Sales and 9% in Profits. These strong numbers make it a top semiconductor stock in India.

Here is an overview of the company's fundamentals:

• Market Capitalization: Rs. 4,26,073 Cr.

• Current Market Price: Rs. 1,570

• Industry P/E: 33

• Stock P/E: 26

• Debt to Equity Ratio: 0.08

• Dividend Yield: 3.31 %

• Return on Equity: 23.5 %

• Return on Capital Employed: 29.8 %

2. Bharat Electronics Limited

Incorporated in 1954, Bharat Electronics Limited(BEL) is one of the largest manufacturers of electronic equipment and systems for the defense sector of India. This company was established under the Ministry of Defence to fulfill their electronic need in the defense sector. 

BEL caters its services to multiple divisions like radars and fire control systems, missile systems, communication systems, electronic warfare, and Naval systems.

BEL is headquartered in Bengaluru Karnataka, in addition to this they have manufacturing facilities in 8 other places. They have also formed Joint ventures with 3 global companies from Holland, France, and USA. 

This company has invested over Rs.1500 crores annually to import various types of semiconductors for their use in defense systems, equipment, and missiles. Additionally, they have set up hubs in collaboration with HAL to develop and manufacture semiconductors in India to meet their requirements.

In FY 24 the company has generated a Sales revenue of Rs.20,268 Crores of which they have retained Net profits of Rs. 3,985 Crores. Furthermore, the 5-year CAGR has shown an 11% and 16% growth in Sales and Profit respectively in FY 24. 

Due to its strong financials, growing defense needs, and exports, BEL is considered one of the best semiconductor stocks in India.

Here is an overview of the company's fundamentals:

• Market Capitalization: Rs. 2,29,783 Cr.

• Current Market Price: Rs. 314

• Industry P/E: 85.3

• Stock P/E: 57.7

• Debt to Equity Ratio: 0

• Dividend Yield: 0.55 %

• Return on Equity: 26.4 %

• Return on Capital Employed: 34.8 %

3. Vedanta Ltd.

Vedanta Ltd. a subsidiary of Vedanta Resources, was incorporated in the year 1965 in Goa. It is one of the world’s foremost natural resources conglomerates having various strategic assets across India, South Africa, and Nambia. 

Their operations are extensively focused on Zinc, lead, silver, iron ore, steel, copper, aluminum, nickel, and oil. They hold a significant market share in most of these sectors, making them a market leader. Vedanta operates 25 mining bases in India and has a presence in seven countries. 

Vedanta has signed MOUs (Memorandum of Understanding) with various partners from Japan, Korea, and Taiwan, to set up their semiconductor plant in Dholera, Gujarat. It intends to cater to applications in mobiles, consumer electronics, automotive, and network equipment.

The company generated annual revenue of Rs.1,43,727 Crores, earning Rs.7539 Crores Net profit in FY-24. During the last five financial years, the company has generated a CAGR of 9% on its Sales growth and 12% on its Profit. 

Here is an overview of the company's fundamentals:

• Market Capitalization: Rs. 1,68,612 Cr.

• Current Market Price: Rs. 454

• Industry P/E: 22

• Stock P/E: 45.9

• Debt to Equity Ratio: 2.85

• Dividend Yield: 6.52 %

• Return on Equity: 10.5 %

• Return on Capital Employed: 20.9 %

4. Dixon Technologies

Incorporated in 1993, Dixon Technologies is extensively an Electronic Manufacturing Services company having operations in electronic products such as consumer electronics, home appliances, CCTVs, and mobile phones. Currently, it is one of the largest LED TV manufacturers catering to more than 35% of India’s requirements.

Dixon has 21 units established across 3 states namely Uttar Pradesh, Uttarakhand, and Andhra Pradesh for their operations, and has 3 Research and development centers in India and China together. 

The company has a joint venture with a Japanese firm Rexxam for manufacturing its circuit board where they make use of the semiconductors designed, developed, and manufactured by Rexxam. This venture helps Dixon Technologies leverage the expertise and technology of the semiconductor industry in their supply chain.

The company has showcased a Sales revenue of Rs.17,691 Crores and has gained a Net profit of Rs.375 Crores in FY24. Based on their performance, it is seen that they have a 5-year CAGR of 43% in terms of Sales growth and 42% in profits. 

Here is an overview of the company's fundamentals:

• Market Capitalization: Rs. 75,104 Cr.

• Current Market Price: Rs. 12,552

• Industry P/E: 128

• Stock P/E: 204

• Debt to Equity Ratio: 0.29

• Dividend Yield: 0.02 %

• Return on Equity: 24.7 %

• Return on Capital Employed: 28.8 %

5. Tata Elxsi Ltd

Tata Elxi was incorporated in the year 1989 and is one of the world’s leading providers of design and technology services across various industries. This company has a client base in over 16 countries catering to a few sectors namely, Transportation, Media & Communication, Consumer Electronics, Semiconductors, and Healthcare & Lifesciences. 

Headquartered in Bangalore they operate in more than 35 locations across 15 countries globally. Tata Elxi has partnered with ARM a UK-based company to accelerate the company’s vehicle sector by leveraging the expertise and innovation in semiconductors of ARM. The company has also collaborated with Powerchip Semiconductor Manufacturing Corporation of Taiwan to set up a semiconductor manufacturing plant in Dholera, Gujarat. 

It has allocated more than Rs.91,000 crores to set up this plant and aims to eliminate the semiconductor shortage in India and also improve its products and services. 

The Company has reported a Sales revenue of Rs.3552 Crores and a Net Profit of Rs.792 crores in FY 24. Their 5-year CAGR also shows a 17% Sales growth and 22% profit growth in 2024.

With these strong financials and extensive resources, Tata Elxsi is considered one of the best semiconductor stocks in India.

Here is an overview of the company's fundamentals:

• Market Capitalization: Rs. 43,764 Cr.

• Current Market Price: Rs. 7,027

• Industry P/E: 38.1

• Stock P/E: 55.5

• Debt to Equity Ratio: 0.09

• Dividend Yield: 1.00 %

• Return on Equity: 34.5 %

• Return on Capital Employed: 42.7 %

What is a semiconductor?

A semiconductor by nature is a product that has the properties of a conductor as well as an insulator. The semiconductors are responsible for conducting the electricity flow in electronic products like mobiles, computers, medical equipment, EVs, etc. The rising adaptation of AI and other digital advancements has increased the demand for semiconductors in the market.

This rising demand has brought a positive impact on the semiconductor industry as many companies like Qualcomm, NXP, ASM Technologies, and others are largely focusing on producing semiconductors, software, and services to increase the supply. As a result, semiconductor stocks have gained significant attention from investors looking to capitalize on this growing sector.

Semiconductor Industry in India

The semiconductor industry has experienced a significant surge in demand in recent years, largely driven by increasing digitalization across various sectors. This trend was further accelerated by the COVID-19 pandemic, which exposed the vulnerabilities in the global semiconductor supply chain. 

The market size of the semiconductor industry was valued at approximately $588 billion in 2024 and is projected to reach $803.1 billion by 2028, growing at a CAGR of 7.5% from 2021 to 2028. Key factors driving this demand include the digital transformation of industries such as healthcare, automotive, and consumer electronics, which have significantly increased the need for semiconductors. 

India is investing extensively in domestic semiconductor production to reduce dependency on foreign suppliers like China and Taiwan, aiming to become a global semiconductor hub with new plants opening across the country. 

Now that we have a detailed overview of the industry, let’s explore the key factors to consider before investing in top semiconductor stocks in India.

Factors to Consider Before Investing in Top Semiconductor Stocks

Before investing in semiconductor stocks consider the below-mentioned factors for the best results:

Market Demand and Trends

Analyze the current and future demand for semiconductors, mainly driven by advancements in technology in the industry as these trends can help understand the potential growth.

Company Fundamentals

Evaluate the financial condition of the companies, including revenue growth, profitability, debt levels, and cash flow. Strong fundamentals often indicate better stability and potential for long-term gains.

Technological Innovation

Evaluate the company’s ability to innovate and adapt to new technologies. Companies leading in research and development (R&D) and technological advancements may have a competitive edge.

Supply Chain and Manufacturing Capabilities

Understand the company’s supply chain and manufacturing capabilities. Having disruptions in their supply chains or manufacturing units can impact performance.

Regulatory Environment

Think about the rules and regulations that semiconductor companies have to follow. Adhering to these rules and meeting industry standards can affect how a company operates and makes money.

How to Invest in the Best Semiconductor Stocks?

Now that we’ve explored the top semiconductor stocks in India, let’s look at the steps to invest:

• Research and find out the top-performing Semiconductor stocks in the market.

• Evaluate and assess your risk appetite and fix your financial goals.

• Shortlist the stocks based on your fundamental and technical analysis.

• Open Demat account and trading account through a trusted stockbroker.

• Invest in the shortlisted stocks and monitor them regularly.

Conclusion

In conclusion, the semiconductor industry has become vital to technological advancement and drives innovations in various sectors. With the rising global demand for semiconductors, companies especially those based in emerging markets like India are ever more instrumental in meeting this need. This can be a promising area for investment, as top companies make strategic moves to develop their capability and decrease dependence on foreign supplies. The semiconductor industry still represents an attractive growth opportunity for investors, provided they undertake careful analysis and strategic planning.