The term "everything rally" effectively encapsulates the exceptional performance witnessed across most asset classes in the past year. Notably, stocks, oil, and even gold saw double-digit percentage gains, with bitcoin also making significant strides.
Among emerging markets, the Indian stock market stood out, reaching new heights, a development buoyed by the government's concerted efforts to promote emerging sectors such as data centres, green hydrogen, and semiconductors.
Catching the buzz in recent trading sessions for its venture into the semiconductor sector is renewable energy player Linde India.
Linde India, a prominent industrial gas producer in India, has a long-standing history and specializes in the production and supply of industrial gases including oxygen, nitrogen, hydrogen, and argon, as well as various specialty gases, which constitute 76% of its business.
The remaining 24% comes from its project engineering division, which focuses on the design, supply, installation, and commissioning of tonnage air separation units. The company caters to a wide range of industries, including steel, automobile, manufacturing, healthcare, and chemicals.
A brokerage report highlighting the critical role of high-purity gases in semiconductor manufacturing has sparked investor interest in the stock.
Fluorine-based gas compounds are used in a process called etching, where they help remove material from the semiconductor wafer to create the desired patterns and structures.
Then there are gases such as arsine, phosphine, and boron trifluoride are used to introduce impurities (dopants) into the semiconductor material. This process, known as doping, alters the electrical properties of the material, enabling it to conduct electricity in specific ways.
The purity of these gases is crucial for ensuring the chemical reactions and processes in semiconductor manufacturing lead to the production of high-quality, reliable electronic devices, positioning Linde India as a pivotal player in the semiconductor industry.
Just like these little known offbeat green hydrogen stocks.
Linde India's history, however, is not without challenges.
Attempts by its multinational corporation holding company to run Linde India with the flexibility of a private company, including efforts to delist it twice, have stirred controversy.
Additionally, the company has been scrutinized for large-sized related party transactions and excessive remuneration practices. Currently, the company's managing director is under investigation by Sebi (Securities and Exchange Board of India), and Linde India has petitioned the Bombay High Court to halt the investigation.
Despite these challenges, Linde India has demonstrated remarkable executional prowess, notably in the timely and cost-effective installation of large plants.
Recently, Linde India acquired 23.96% stake in Zenataris Renewable Energy forRs 410.9 million, a move anticipated to reduce costs through lower tariffs from renewable power purchases.
Over the past five years, Linde India's net profit has surged remarkably, fuelled initially by the demand for medical oxygen during the pandemic and subsequently by growth in industrial gases. Net profit has surged almost 20 times to ₹5,381 million from ₹257 million in December 2018.
The industrial gases market is expected to grow significantly, with Linde India positioned as a key player. The company's debt-free status and practice of rewarding shareholders with dividends reflect its robust financial management.
Linde India's competitive edge is further enhanced by its technical capabilities, especially critical now as significant investments are made in engineering projects.
The company's parent, Linde Global, with substantial revenues from the electronics sector, counts major semiconductor industry players among its top customers. With strong management commentary and expansion plans targeting the semiconductor industry, Linde India is poised for improved margins.
Linde India's share price has shown impressive performance recently, with a 21% rally in the past five trading sessions. This month so far, the stock is up 21%.
Linda India touched a 52-week high of ₹6,886 on 4 September 2023, compared to its 52-week low of ₹3,664 seen on 16 March 2023.
In the past one year, Linde India share price has rallied 75%.
Here’s a table comparing Linde India with its listed peers:
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
