Kolkata: In the digital and networked economy, semiconductors assume central significance since microchips that power almost every electronic device, from smartphones to electric vehicles and critical infrastructure are products of this industry. Below we present four stocks in the semiconductor business, which boast of zero debt, a significant amount of cash, strong growth, with fast growth in profits. The government’s Semiconductor Mission 2.0 creates the ground or these companies to flourish. Let’s have a closer look at these companies.
Tata Elxsi
Market price: Rs 4,838
Tata Elxsi is a premium design and technology services company within the Tata Group. It specializes in automotive electronics, EV software, ADAS, semiconductor design services and media technology. Tata Elxsi doesn’t directly manufacture chips, but it plays a significant role in chip design and embedded systems in the automotive and EV segments. The company has a strong global client base, high margins, and stable cash flow. This company is completely debt-free and trades at a premium valuation, reflecting its quality and brand value.
Bharat Electronics
Market price: Rs 441
It is one of India’s foremost defence electronics companies. It is a PSU which works in association with the Indian Army and DRDO. Its core competence lies in radar systems, electronic warfare, missile electronics, avionics and communication systems. Though it is not a pure play semiconductor company it manufactures strategic semiconductor devices and high-end electronic components. BEL is in a very strong financial position. The company has no debt, very robust cash reserves and has paid dividends regularly. Over the past three years, the company’s net profit CAGR has been approximately 27%. The increasing focus on self-reliance in the defense sector appears to be directly benefiting BEL.
Mindteck (India)
Market price: Rs 216
Mindteck India is a small-cap engineering and IT services company that provides support services to the semiconductor industry. The company works in semiconductor design support, embedded systems, product engineering and IoT solutions, though it does not manufacture chips. Mindteck is primarily associated with global OEMs and technology companies. It is completely free from debt. However, its market cap is small and profit growth is volatile. Analysts consider it a high-risk, high-potential stock, offering exposure to the semiconductor services segment.
MosChip Technologies
Market price: Rs 191.35
MosChip is one of the few listed fabless semiconductor companies in India, which is directly involved in chip design and the semiconductor value chain. It provides ASIC design, semiconductor IP development, and turnkey chip design solutions. The company’s strength lies in its collaboration with global chip companies and its ability to benefit from the growing demand for chip design. As the semiconductor ecosystem in India strengthens, companies such as MosChip are becoming more and more significant. It is free from debt and has posted a profit CAGR of approximately 29% over the past three years. However, its valuation is high and the P/E ratio is high, suggesting that growth is already factored into its price.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, InvITs and any form of alternative investment instruments and crypto assets.)