Best Semiconductor Stocks in India

The semiconductor industry in India is experiencing significant growth due to technological advancements like the EV revolution and the 5G rollout. The industry is crucial for the economy and is expected to reach USD 100.2 billion by 2032 due to increasing demand for smartphones, wearables, automotive parts, and computers. The Indian Ministry of Electronics and Information Technology (MeitY) has launched the India Semiconductor Mission (ISM) with a USD 10 billion commitment, including incentives for manufacturing, the Design Linked Incentive scheme to support semiconductor startups, and the 'Make in India' initiative and Production Linked Incentive scheme to establish semiconductor manufacturing facilities in India. In this blog, we will analyse the best semiconductor stocks in India for 2024 based on their performance and market value. 
 

What are Semiconductor Stocks?

Semiconductor stocks are stocks that represent the companies involved in the production and distribution of semiconductor components. From computers to smartphones, these tiny components carefully control the flow of electricity in various gadgets. For technological progress, semiconductor stocks like memory chips, microprocessors, and various electronic modules are important.  These stocks not only support technology but also support India's economic development. The makers of Indian semiconductors are at the top of innovation today and well-positioned to fulfil the growing demands of the market in an era where the demand for electronic gadgets is on the rise
 

Top Semiconductor Stocks List 2024

This table provides an overview of some of the top semiconductor stocks India, including their current share prices and market capitalisations:

Disclaimer: This list of semiconductor stocks contains data updated as of 24th June 2024. However, it's important to conduct detailed research before making any investment decisions in these stocks. 
 

Overview of the Top Semiconductor Stocks

The above-mentioned companies are among the most liked performers in semiconductor stocks, but why so? Read on to learn more about the achievements and working style.

Polycab India Ltd.

Polycab India was founded in 1996 and it is a leading electrical brand with over Rs 89 billion in revenue. PIL is the largest manufacturer of wires and cables in India and one of the fastest-growing players in the FMEG space.

• The company is almost debt-free.
• The company has delivered good profit growth of 29.0% CAGR over the last 5 years
• The company has been maintaining a healthy dividend payout of 24.0%

Bharat Electronics Limited

Bharat Electronics Limited, established in 1954, is a Navratna Public Sector Undertaking. The Company possesses expertise in a spectrum of activities, encompassing the design, development, manufacturing, supply, and life cycle support of strategic electronic products and systems.

• The company is almost debt-free.
• The company has been maintaining a healthy dividend payout of 47.7%
• The company has delivered a sales growth of 10.8% over the past five years.
• For the quarter ended March 2024, the company has reported a consolidated net profit of Rs 8,789.51 Crore, up 103.01 % from last quarter.

Bharat Heavy Electricals Ltd.

It was founded in 1964 and is the flagship engineering and manufacturing company of India owned and controlled by the Govt. of India

• Stock is trading at 4.28 times its book value
• The tax rate seems low
• The company has a return on equity of 1.49% over the last 3 years.
• Earnings include another income of Rs.610 crore.
• Debtor days have increased from 58.0 to 73.1 days.
• Working capital days have increased from 121 days to 182 da

Apar Industries Ltd.

APAR Industries was started in 1958, in India. Over 60 years later, they have grown into a diversified $1 billion company and expanded to over 140 countries as a highly trusted manufacturer and supplier of conductors, transmission cables, specialty oils, polymers, and lubricants. 

• The company has reported net profit after tax of Rs 236.21 Crore in the latest quarter.
• The company has delivered good profit growth of 44.3% CAGR over the last 5 years
• The company has a good return on equity (ROE) track record: 3 Years ROE 26.0%
• The company has been maintaining a healthy dividend payout of 23.7%

CG Power and Industrial Solutions Limited

CG is a global pioneering leader in the management and application of electrical energy. With more than 10,000 employees across its operations in around 85 countries, CG provides electrical products, systems, and services for utilities, power generation, and industries. The company is organised into three business groups: Power, Industrial, and Automation. 

• The company is almost debt-free.
• The company has delivered good profit growth of 34.0% CAGR over last 5 years
• The company has a good return on equity (ROE) track record: 3 Years ROE 58.4%

Hitachi Energy India Limited

Hitachi Energy India Ltd (formerly known as ABB Power Products and Systems India Ltd.) was created in 2019 as a Joint Venture between Hitachi and ABB's Power Grids. The company serves utility and industry customers, with a complete range of engineering, products, solutions, and services in areas of Power technology.

• Stock is trading at 35.9 times its book value
• The company has a return on equity of 12.5% over the last 3 years.
• The dividend payout has been at 10.6% of profits over the last 3 years

V Guard Industries Limited

Founded in 1977, V-Guard Industries Ltd. (‘V-Guard’) is a reputed Indian company manufacturing innovative and experiential products in the categories of Electronics, Electricals, and Consumer Durables. 

• The company has reduced debt.
• The company has been maintaining a healthy dividend payout of 27.5%
• The company's working capital requirements have reduced from 69.4 days to 53.5 days

Honeywell Automation India Ltd

Honeywell Automation India Limited (HAIL)was started in the year 1987 as a JV between Tata and Honeywell. It was known as Tata Honeywell Limited each holding 39.54% stake. Later in 2004 Honeywell Asia Pacific Inc. bought Tata's stake and the name was changed to Honeywell Automation India Limited

• The company is almost debt-free.
• The company has been maintaining a healthy dividend payout of 20.1%
• Stock is trading at 12.6 times its book value
• The company has delivered a sales growth of 5.03% over the past five years.

Havells India Ltd 

Havells India Limited is a leading Fast Moving Electrical Goods (FMEG) Company and a major power distribution equipment manufacturer with a strong global presence.It enjoys enviable market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Fans, Modular Switches, Home Appliances and a lot more. 

• The company is almost debt-free.
• The company has been maintaining a healthy dividend payout of 20.1%
• The stock is trading at 13.9 times its book value.
   

Semiconductor Industry in India

India's semiconductor industry, worth USD 34.3 billion in 2023, is vital for the financial system and era zone increase. Currently, India is predicated on imports from Taiwan, China, Korea, and Vietnam. However, with increasing calls for digital gadgets, there's a need to reduce dependence. The Ministry of Electronics and Information Technology (MeitY) has released the India Semiconductor Mission (ISM) with a $10 billion commitment, such as incentives for manufacturing and the Design Linked Incentive scheme to assist semiconductor startups. The authorities 'Make in India' initiative and Production Linked Incentive scheme also provide incentives for semiconductor production centres in India.
 

Features of Semiconductor Stocks

The Semiconductor stocks offer several features that make them an appealing investment option. This includes:

Diversification Opportunities:

The industries span healthcare, automotive, and consumer electronics, among others. By investing in semiconductor stocks in India, one can diversify and reduce the risks associated with investing in one sector

Technological Innovation:

The industry allows innovation in technology, such as Artificial Intelligence and 5G networks, to gain growth within this sector. This investment can give people exposure to the innovation and potential high growth that the semiconductor industry offers.

Market Demand: 

The usage of electronic gadgets is increasing daily. Such towering demand may drive up the growth and profitability of semiconductor companies, thus accruing good returns to investors.

Growth Potential: 

India's semiconductor industry is beginning to change quickly, and some of the biggest companies in this sector have the potential to return handsomely for their investors. That's the kind of possibility that companies might similarly rise to meet the increasing demand for semiconductors.

Advanced Manufacturing: 

The process of semiconductor manufacturing, the techniques involved, and the high technology used require innovation. Thus, the company leading in such a domain gets a competitive edge and may increase profitability.
 

Why Invest in Semiconductor Stocks?

Investing in semiconductor stocks in 2024 is a smart option as it provides strong growth patterns and numerical data. With the rise in electric vehicles and 5G technologies, semiconductor companies have experienced rapid growth because of the increasing demand for semiconductor chips. This has resulted in high returns for these companies, which means an investor can expect high returns from semiconductor companies. 

The semiconductor stocks have performed very well in the past which shows they are adaptable and capable of long-term success. The best part about these stocks is despite the stock market's ups and downs these stocks are still growing. They are not only profitable and affordable but also have fresh product ideas. 

Many experienced investors are optimistic regarding the future of semiconductor stocks in the coming years. According to them, these stocks will rise as new advancements in technologies like artificial intelligence and smart devices occur. Furthermore, the fact that semiconductors are currently in limited supply shows how important they are to a variety of businesses. This gives semiconductor companies numerous chances to increase their revenue in the future.
 

How to Invest in Semiconductor Stocks?

Here's a step-by-step guide to investing in semiconductor stocks:

1. Before investing, it is crucial to first research the semiconductor company's financial performance, product lines, business models, and potential growth.
2. Now, select the stocks that most closely align with your investing goals and risk tolerance. 
3. To start investing in these stocks, open a brokerage account with a reputable company like BlinkX. They provide access to a range of stocks, and research tools, and have competitive trading fees.
4. Deposit money into your BlinkX trading account to ensure that your investment strategy is sound and consistent with your investment strategy.
5. After purchasing your stocks, monitor your investments. Keep an eye on news from the company, the industry, and market trends that might affect the value of your investment.
    

Risks Associated with Investing in Semiconductor Shares

The semiconductor enterprise is a crucial component of contemporary characteristics. However, the semiconductor industry has a few precise dangers and challenges. You must recognise those capability roadblocks before entering this market.

• High-concentration risks because of focused production make it vulnerable to supply chain disruptions.
• Technological/Cyber dangers because of fast chip development and capacity cyber-assaults on production centres.
• ESG dangers arise due to the enterprise's function in water, strength intake, and dangerous waste production, which could probably affect weather alternatives.
• The industry's widespread presence in Asia, with Taiwan and China being the most important producers, creates geopolitical risks.
• Financial dangers due to growing chip manufacturing prices, shortage of professional workers, and upward push of counterfeiting.
   

Factors to Consider Before Investing in Semiconductor Stocks in India

Before we get into individual stocks, let's look at some key criteria to consider while investing in the semiconductor industry: 

1. Market Trends: Learn about the modern developments within the semiconductor marketplace. The want for 5G technology, synthetic intelligence, and electric automobiles all have a huge impact on semiconductor companies.
2. Financial Health: Assess a corporation's financial overall performance, along with sales increase, profitability, and debt level. A regular financial state of affairs is essential for long-term funding.
3. Investigate an Enterprise's R&D Initiatives: Innovation drives development inside the semiconductor commercial enterprise, therefore, corporations with robust R&D pipelines are probable to succeed.
4. Global Supply Chain: Given the worldwide nature of semiconductor manufacturing, keep in mind supply chain disruptions and geopolitical issues.
    

Conclusion 
Investing in semiconductor stocks in India can be a smart choice for those wanting to make the most of the semiconductor field. When picking the top semiconductor stocks to put money into, it's key to look at things like how financially healthy the company is, trends in the industry, tech upgrades, and rules they must follow. By spreading your investments and keeping up with news on the semiconductor scene, you can likely enjoy the rewards of this area. Online trading apps in India offer convenient access to a range of semiconductor stocks, making it easier for investors to explore this investment opportunity.