We are getting multiple inquiries on Semiconductor Multibagger stocks post the Cabinet approval of Rs. 76000 Crore for Semiconductor sector. This was on light with Global Semiconductor shortage induced due to Pandemic, Digitization, EV & IoT aspects.
Following are the key stocks which we would like to Look into based on this event realization. Plus, we are providing the Value Investing style outlook of the same. You will also need to know that we have a released a Semiconductor multibagger in the Hidden Gems service too. Hope it will give 500% returns like our Tata Elxsi & Olectra Greentech in the past year.
|Tata Elxsi||Company is reputed & deep into IoT business with newly launching Semiconductor factories in India. It can be a huge benefit of the Semiconductor shortage opportunity.|
The Economic Moat of the company is Very Strong as it gets the Reputation of TATA & Automatic business from TATA Motors & Other TATA Sons companies.
Debt & Integrity also good.
Only Problem is Super-High Valuation of 30X Book Value Ratio & PE 80 with No Intrinsic Value discount. More
|Ruttonsha International Rectifier||Company is into semiconductor devices manufacturing, but for power rectifier section. It may require few years of ramping up to align with current industry trends in the semiconductor sector.|
Growth & Debt is good to moderate, But the Economic Moat is weak. Valuation is also moderate being a smallcap one can enter this counter now.
|ASM Technologies||ASM is similar to Tata Elxsi in services including IoT, EV, Robotics & Semiconductor with 25+ years of experience.|
Growth is good with recent Pandemic times showing impressive progress in Revenue & Profits.
Economic Moat is moderate as it is a midcap company. Debut is okay with high Interest coverage ratio.
Valuation is bit high though.
|Moschip Technologies||The company is into Chip Technologies and IoT. However the past years shown heavy mismanagement & the company is in loss. A turnaround is visible in the upcoming year but not credible.|
It may not be considered as a Turnaround Darkhorse as the company is already claiming at high valuations of PE Ratio 1500 & Book Value of 20X!!
The promoters being constant sellers in past 3 year in the range of 8% shows their lack of confidence in the company.
Company is paying high Interest of 50% Operating Profit margin & also Depreciation to make a Maegre Profits.
|SPEL Semiconductor||SPEL is into consumer electronics & Integration of electronics in automotive sector with an Edge in Semiconductor Assembly & Testing services. But the company is into losses with a high debt exposure.|
If the turnaround play goes well, this company can become a Multibagger given the facts of moderately valued at PE, PB & PEG ratios.
In a drive to establish India as a worldwide powerhouse for hi-tech production, the Union Cabinet agreed a Rs 76,000 crore policy boost for the country’s semiconductor and display manufacturing ecosystem on Wednesday December 16 2021.
IT and Telecom Minister Ashwini Vaishnaw, who announced the Cabinet’s decision, stated that electronics play an essential role in everyday life, and semiconductor chips are a critical component of electronics coupled with the Global Shortage of semiconductor.
He said the Rs 76,000 crore ($1 Billion) program has been approved for the growth of semiconductors and the display manufacturing ecosystem, while outlining the parameters of the project.
By providing a globally competitive incentive package to enterprises in semiconductors and display manufacturing, as well as design, the program is projected to usher in a new era in electronics manufacturing. It will boost India’s scientific capacity and economic self-sufficiency in these vital areas aligning with t he strategic growth in IoT, EV sectors which are the future compounded growth sectors.
By facilitating finance support and technological cooperation, the program will boost semiconductor and display manufacturing for startup, smallcap & midcap companies.
The news comes at a time when many businesses around the world have been dealing with a chip scarcity for quite some time due to Pandemic & Rapid Digitization.
China & Taiwan Trouble
The main competing countries in the semiconductor markets are China & Taiwan. The water requirement for producing Silicon Wafers is a Limitation for China which made Taiwan a core producer of Semiconductors. Right now the Shift from China & Taiwan will happens to India boosting the smallcap, midcap semiconductor companies in India. The acceleration from China to India also happened due to COVID times where China-US relations were shaken.
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