Moschip Technologies: The Semiconductor industry has experienced unprecedented growth in the coming years. This is mainly driven by the fact that there has been an increase in demand and investor interest which is driven by the adoption of recent innovation. These recent innovations include EVs, 5G Networks, Artificial Intelligence, Internet of Things (IoT).

Moschip technologies have performed outstandingly, returning an impressive 111.66% over the past year. As a major player in the semiconductor industry, Moschip Technologies is well-positioned to benefit from any industry growth. 

In this article, we will analyze Moschip technologies and assess their potential to sustain their uptrend and possibly cross the Rs. 200 mark.

Company Overview Of Moschip Technologies

Moschip Technologies, established in 1999, stands out as a leading company in the semiconductor industry. Listed on stock exchanges, Moschip has designed and manufactured more than 20 products and shipped more than 10 million chips worldwide. Headquartered in Hyderabad, India, Moschip remains active with over 1,300 engineers in Silicon Valley – USA, Hyderabad, Bangalore, Ahmedabad, and Pune.

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As a legendary semiconductor services company, MosChip excels in providing turnkey ASIC and IP design services, with a strong focus on mixed-signal-edge device SoC ASIC solutions. MosChip Technologies offers a wide range of services in Semiconductors and Embedded Systems & Software Design. Specializing in Turnkey ASICs, Mixed Signal IP, Semiconductor & Product Engineering, and IoT Solutions, MosChip offers cutting-edge technologies and solutions.

Their expertise spans areas such as Aerospace & Defense, Consumer Electrical, Automotive, Medical, and Networking & Telecommunications. MosChip’s advanced solutions are designed to meet the specific needs of these industries, ensuring efficiency and innovation.

Moschip has established strategic partnerships with leading foundries such as TSMC, UMC, Global Foundries, and Tower Jazz. This collaboration ensures that MosChip has access to the latest technologies and manufacturing processes, strengthening its position as a leader in the semiconductor industry.

Moschip’s Stock Performance

Moschip Technologies is currently trading at a price-to-earnings (P/E) ratio of 318, which is significantly higher than the industry average. This can be attributed to how new the semiconductor industry is compared to the already established industries. The current boom of EVs and AI has made investors overvalue the stock but as the fundamentals of the companies are getting stronger with meaningful collaborations and capital expenditure the numbers might be changing.

The stock has given a 153.28% 1-year return and a whopping 822.13% 5-year return. The shareholding pattern does suggest that the promoters of Moschip Technologies are reducing their ownership of the company from June 2021 at 57.14% to September 2023 at 47.33%. However, as it is a low dilation of the shares of -6.82% over the period of 3 years, it does not bring any concerns as to the management of the company losing confidence. 

Financials Of Moschip Technologies

MosChip’s revenue from operations has shown a significant upward trend, with a compound annual growth rate (CAGR) of 24.23% over the past five years. The company’s revenue has grown from ₹99.32 crore in 2020 to ₹293.91 crore in 2024, indicating a substantial increase in its business operations. This growth can be attributed to the company’s expanding customer base, increased demand for its products and services, and strategic partnerships.

These reasons are correlated with the boom in the semiconductor industry due to the rise in demand for Electric vehicles and Artificial intelligence. MosChip’s profitability has also improved significantly over the years. The company’s EBIT margin has increased from -22.85% in 2020 to 5.90% in 2024, indicating a substantial improvement in its profitability.

The net income of Moschip Technologies has also shown a consistent upward trend, with a net income of ₹9.88 crore in 2024, compared to a net loss of ₹46.01 crore in 2020. With a RoE of 3.66% in 2024, compared to a negative RoE of -73.88% in 2020 it is improving. This indicates that the company is generating a higher return on its shareholders’ equity, making it an attractive investment opportunity.

Its debt-to-equity ratio has decreased from 1.09 in 2021 to 0.26 in 2024, indicating a significant reduction in the company’s debt levels. This is a positive sign, as it indicates that the company is managing its debt effectively and has a lower risk profile. It has also improved its ICR significantly, with a ratio of 2.88 in 2024, compared to a ratio of -4.83 in 2020.

MosChip’s current ratio has remained relatively stable over the years, with a ratio of 1.71 in 2024, compared to a ratio of 0.63 in 2020. This indicates that Moschip Technologies has sufficient liquid assets to meet its short-term obligations, making it a relatively low-risk investment opportunity.

Key Ratios20242023202220212020
Revenue from Operations (Cr)Rs. 293.91Rs. 198.36Rs. 147.64Rs. 105.19Rs. 99.32
EBIT Margin (%)5.90%7.03%10.20%-0.49%-22.85%
Net Income (Cr)Rs. 9.88Rs. 6.18Rs. 6.45Rs. -9.15Rs. -46.01
RoE (%)3.66%5.46%9.86%-17.28%-73.88%
D/E0.260.781.111.090.64
Interest Coverage Ratio2.881.75-0.06-3.56-4.83
Current Ratio1.711.810.840.650.63

Market Potential and Overview Of Moschip Technologies

To fuel the growth of industries like EVs, 5G networks, and Artificial intelligence, this semiconductor industry is the main backbone of these technologies. Semiconductor will benefit from this growth from their innovation and development, as this increases people’s spending in the economy. There was a worldwide shortage and drop in revenue for the semiconductor industry in the year 2023.

India’s push to improve this industry has led the government to introduce multiple PLI and DLI schemes to help companies set up manufacturing facilities and so on. The government launched a PLI scheme for companies with a budget of Rs. 76,000 crores. It supported 50% of project cost and capital expenditure on a pari-paasu (equal footing) basis for setting up fabs.

Ministry of Electronics and Information Technology has also announced the DLI scheme to improve the semiconductor chip design ecosystem in India, where CDAC is responsible for the implementation of the scheme as the Nodal Agency. As the semiconductor industry is in its growth stage the companies are still not established and the existing electronic manufacturers still have a long way to reach their full potential.

Due to this, the industry is very competitive where the main basis of competition is the business’ USP and its marketing strategies. India’s semiconductor industry is expected to grow at a compounded annual growth rate (CAGR) of 20.1%, expected to reach USD 100.2 billion dollars by 2032 from USD 34.3 billion in 2023.

The Indian semiconductor industry is majorly imported driven mainly by China and Hong Kong. India’s semiconductor companies mainly focus on research, design, and assembly of the product. Currently, there are only a notable number of players in this industry in India. 

Future Plans Of Moschip Technologies

Moschip Technologies has acquired Softnautics Inc. to increase its stand in product engineering solutions for embedded, FPGA, and VLSI. It has also become a Member of the design center alliance (DCA) of TSMC – the company has 61% market share in the global semiconductor foundry. This will help them by getting them access to leading technology from TSMC. 

They have new strategies which include Artificial intelligence, Application-specific standard products (ASSP), RISC V platform, and other trending and emerging markets. These key developments help Moschip Technologies to acquire new customers and other order book based revenue. They currently have no capital work in progress in their FY23 annual reports and no capital expenditure.

Key Metrics Of Moschip Technologies

ParticularsAmtParticularsAmt
CMPRs. 181Market Cap (Cr.)Rs. 3,413
Stock P/E (TTM)345EPS (TTM)Rs. 0.53
RoE (%) (TTM)5.17%RoCE (%) (TTM)6.62%
Promoter Holdings (%)47.30%DII Holdings (%)0.00%
Debt-to-Equity (TTM)0.26Interest Coverage Ratio (TTM)2.88
Current ratio (TTM)1.71Net profit margin (TTM)3.36%

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Conclusion

The semiconductor industry is poised for significant growth, driven by the increasing demand for electric vehicles, 5G networks, and artificial intelligence. MosChip Technologies Ltd, a leading player in the industry, has been well-positioned to capitalize on this growth. Moschip Technologies has demonstrated strong financial performance, with a compound annual growth rate (CAGR) of 24.23% over the past five years and a significant improvement in profitability.

MosChip’s strategic partnerships and investments in emerging technologies such as RISC-V and AI are expected to drive future growth. Despite the current high valuation, the company’s fundamentals are strong, making it an attractive investment opportunity for those looking to participate in the semiconductor industry’s growth trajectory.

Though there is still only Rs. 40 to reach the Rs. 200 mark, it is still a volatile company. With that in mind, the industry growth with other partnerships for the company and other innovations makes this stock price’s target of Rs. 200 very reachable.

Written by Rithesh Balaji

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