The stock market offers its investors a wide range of stocks to choose from. There is a stock for every investor’s choice and preference. From multiple industries to numerous companies under each of them, stock market investors have unlimited opportunities.
Our focus today is on one particular industry – the semiconductor sector. So, if this area interests you, this article is for you. Read further as we explore and analyse the past and prospects of two popular semiconductor stocks – Tata Elxsi and Dixon Technologies.
Overview of the semiconductor industry in India
Before we get into the economics of India’s semiconductor industry, let’s brush up on our knowledge of semiconductors.
Semiconductors are materials which are half conductors and half insulators. While conductors allow electricity to pass through them (For example, copper), insulators do not allow electricity to pass through (For example, glass). Germanium, silicon, carbon, arsenic, etc., are examples of semiconductors.
The semiconductor industry consists of all the companies involved in the production and distribution of semiconductors.
The Indian semiconductor industry, valued at $23.2 billion, is expected to reach $80.2 billion by 2028 with a compounded annual growth rate of 17.10%. The growing need for digitisation and technology across all sectors is one of the powerful driving forces for the growth of India’s semiconductor industry. Adding to it is the government’s Make in India initiative, which has contributed significantly towards increasing the domestic production of semiconductors.
Despite challenges like limited infrastructure and global competition, India’s semiconductor industry has been growing due to its skilled workforce.
Well, now that you know how the industry is performing, you may also be interested to learn more about investment opportunities here. If yes, continue reading as we explore two well-known stocks in the semiconductor space.
Also read:Everything you need to know about semiconductor stocks
Tata Elxsi
Part of the Tata Group, Tata Elxsi is a leading provider of design and technology services to different industries, including automotive, broadcast, communication, healthcare, etc. The company works towards helping clients design their products virtually through AI (Artificial Intelligence), IoT (Internet of Things) and other allied services.
History
Established on 05 May 1989 in Bengaluru, Tata Elxsi aimed to improve the application of electronics and software across different industries. The objective back then was to promote innovation and fasten the adoption of cutting-edge technology among its clients.
Mission
Today, Tata Elxsi works on a mission to be the preferred design and technology partner to clients, providing different and good quality products that drive business growth.
Tata Elxsi today
Tata Elxsi has over 12,000 employees today, working across 36 different locations. The firm has grown to be a market leader and a premium engineering service provider across the globe.
- As per Tata Elxsi’s results for the quarter ended 31 December 2023, revenue from operations stood at ₹91,423.25 lakhs.
- Tata Elxsi’s share price as of 01 April 2024 is ₹7,760.05.
- According to Tata Elxsi’s share price history for the last year, the price has gone up by over 29% from ₹6,011.30 on 03 April 2023.
- The latest news about Tata Elxsi is its collaboration with Dräger, a global leader in the medical technology space, to improve critical care innovation in India’s medical sector. Despite the stock’s underperformance as compared to NIFTY 50 this year, the prices surged by 1.4% after the announcement of this partnership.
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Dixon Technologies
Dixon Technologies is an Indian provider of design-based solutions to clients across various industries, including consumer durables, home appliances, mobile phones, medical equipment, wearables, etc. The company claims to stand out among competitors due to its healthy relationship with clients, its supply chain strategy and cost-effective pricing methods.
History
Established in 1993, Dixon began its operations by manufacturing colour televisions in India. It entered the lighting space in 2008 by producing CFL (Compact Fluorescent Lamp) bulbs. It gradually expanded to include home appliances through washing machine manufacturing in 2010, and by 2014, the firm had crossed ₹10,000 million in revenue.
Mission
The firm works to be the preferred manufacturing and solution partner to all its clients across different industries.
Dixon Technologies today
With over 30 years of operating in this space, Dixon is a well-known name in the semiconductor industry. The firm has 21 state-of-the-art manufacturing facilities and 3 R&D centres in different locations, with more than 2,700 employees working towards achieving excellence.
- The firm’s revenue from operations for the quarter ending 31 December 2023 stood at ₹4,81,825 lakhs.
- Dixon Technologies’ share price as of 01 April 2024 is ₹7,592.55.
- Dixon Technologies has been a multi-bagger stock in the last year, with its share price rising by over 162% from ₹2,893 on 03 April 2023. Industry experts credit this rise to Dixon’s strong order book and financials.
- Recent news of Dixon Technologies signing a contract with Compal Smart Device to manufacture smartphones led to its shares reaching an all-time high in February 2024.
- According to a technical analyst, Dixon Technologies’ share price target for the short term can be set at ₹8,130 with a stop-loss of ₹7,200.
Tata Elxsi vs Dixon Technologies – Financials
| Particulars | Tata Elxsi | Dixon Technologies |
| Revenue from operations (FYE 31 March 2023) | ₹314,472 lakhs | ₹699,740 lakhs |
| EBIDTA | ₹961 crores | ₹518 crores |
| PAT | ₹755 crores | ₹255 crores |
| P/E | 60.64 | 126.54 |
| Dividend | ₹60.60 | ₹3 per share |
| Market capitalisation | ₹48.26 trillion crores | ₹45.42 trillion crores |
| Basic EPS | ₹121.26 | ₹35.45 |
| Return on Capital Employed (RoCE) | 41.73% | 25.74% |
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Bottomline
The semiconductor industry in India is booming. Tata Elxsi and Dixon Technology are two popular stocks in this sector.
Tata Elxsi vs Dixon Technology – the choice between the two depends entirely on the investor’s investment objective. Despite Dixon having a higher revenue than Elxsi, its profit margin is significantly lower. Other important parameters, such as profits, dividends, EPS, etc., are all higher for Tata Elxsi. However, Dixon’s share prices have grown rapidly over the last year, making it a multi-bagger stock.
So, an investor looking at stable and significant income may prefer Tata Elxsi’s share, while an investor looking at noteworthy capital appreciation may choose Dixon Technologies’ shares.
