Introduction
The semiconductor sector is set for significant growth in 2024, driven by technological advancements and government initiatives, especially in India. The Indian government has launched several initiatives to boost domestic semiconductor manufacturing, including the Production-Linked Incentive (PLI) scheme. As the demand for semiconductors continues to rise across various industries, identifying financially Strong Semiconductor Stocks in this sector becomes crucial for investors looking to capitalize on this growth.
In this article, we explore two semiconductor stocks with strong financials and promising growth prospects: RIR Power Electronics Ltd and MosChip Technologies Ltd.
Both companies have demonstrated remarkable financial performance and strategic initiatives, making them worthy additions to any investment watchlist.
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1. RIR Power Electronics Ltd
Market Performance
RIR Power Electronics Ltd, with a market capitalization of Rs. 1,310 crores, started Friday’s trading session on a high note at Rs. 1,938.05, gaining around 3% compared to its previous close of Rs. 1,845.80. The stock closed the day at Rs. 1,882 apiece.
Financial Highlights
- Quarterly Performance: The company’s revenue increased by 47%, from Rs. 14.71 crores during the December quarter to Rs. 21.57 crores in the March quarter. Net profits magnified by 148%, from Rs. 1.12 crores to Rs. 2.78 crores during the same period.
- Year-over-Year Performance: Comparing the same metrics on a YoY basis, the revenue jumped by 33%, from Rs. 16.26 crores during Q4FY23 to Rs. 21.57 crores in Q4FY24. Net profits surged by 132%, from Rs. 1.2 crores to Rs. 2.78 crores during the same timeframe.
Manufacturing Capabilities
RIR Power Electronics has a manufacturing facility located in Halol, Gujarat, spread over 40,000 square feet.
The facility includes die fabrication, soldering, encapsulation, and testing capabilities. Furthermore, the company is setting up a Rs. 6,186 million Silicon Carbide (SiC) plant in Odisha, the first of its kind in India, with support from central and state government incentive schemes.
Key Financial Metrics
- Return on Equity (RoE): 11.18%
- Return on Capital Employed (RoCE): 12.52%
- Net Profit Margin: 10.52% during FY23-24
Product Range
RIR Power Electronics manufactures and sells various power semiconductor devices, including phase control thyristors, standard recovery diodes, fast recovery diodes, power modules, bridge rectifiers, and water-cooled assemblies. These products are crucial in power generation, transmission, and distribution, as well as in consumer electronics, automotive systems, and industrial automation.
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2. MosChip Technologies Ltd
Market Performance
With a market capitalization of Rs. 5,164 crores, MosChip Technologies started Friday’s trading session on a flat note at Rs. 273.95. The shares hit a low of Rs. 272, losing 1%, and closed the day at Rs. 272.90 apiece.
Financial Highlights
- Quarterly Performance: The company’s revenue jumped by around 7%, from Rs. 75.42 crores during the March quarter to Rs. 80.35 crores in the June quarter. Net profits increased by 357%, from Rs. 87 lakhs to Rs. 3.98 crores during the same period.
- Year-over-Year Performance: Comparing YoY, the revenue surged by 41%, from Rs. 57.01 crores during Q1FY24 to Rs. 80.35 crores in Q1FY25. Net profits grew by 24%, from Rs. 3.21 crores to Rs. 3.98 crores during the same timeframe.
Major Contract and Future Prospects
During the quarter, MosChip secured a Rs. 509.37 crores contract from the Centre for Development of Advanced Computing (CDAC). This contract involves developing a high-performance computing (HPC) System on a Chip (SoC) using state-of-the-art 5nm technology. Revenue from this project is anticipated to impact the company’s financials starting in Q2 FY 2025.
Key Financial Metrics
- Return on Equity (RoE): 11.18%
- Return on Capital Employed (RoCE): 12.52%
- Net Profit Margin: 10.52% during FY23-24
Business Focus
Headquartered in Telangana, MosChip is a semiconductor and system design company focusing on Turnkey ASICs, Mixed Signal IP, Semiconductor and Product Engineering, and IoT solutions. The company caters to various industries, including Aerospace and Defence, Consumer Electronics, Automotive, Medical, Networking, and Telecommunications.
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Conclusion
Both RIR Power Electronics Ltd and MosChip Technologies Ltd demonstrate strong financial performance and promising growth prospects in the semiconductor sector.
RIR Power’s significant revenue and profit growth, coupled with its strategic expansion into Silicon Carbide manufacturing, position it as a key player in the industry.
Meanwhile, MosChip’s substantial contract with CDAC and robust financial metrics indicate its potential for continued success.
Investors looking to capitalize on the growth of the semiconductor sector should consider adding these financially strong stocks to their watchlist.
The combination of robust financials, strategic initiatives, and government support makes these companies well-positioned to benefit from the anticipated expansion in the semiconductor market.
P.S: This is not an investment advice.
