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  • May 9, 2023 - Top 5 Internet of Things (IoT) Stocks to Add to Your Watchlist

Top 5 Internet of Things (IoT) Stocks to Add to Your Watchlist

May 9, 2023

Top 5 Internet of Things (IoT) Stocks to Add to Your Watchlist

The assault of technology has been underway for years. We are now starting to see serious progress.

Gone are those days when just computers, laptops, and smartphones were connected to the internet.

In today's world, everything has access to the net.

Cars, televisions, light bulbs, ceiling fans, air conditioners, doorbells, and more are connected to the internet.

But how is this possible?

Through the Internet of Things (IoT). It is one of the most talked about technology now. All set to boom in the next five years.

But what is IoT? The IoT is a network of interrelated and internet-connected objects. It can collect and transmit data over a wireless network without human intervention.

Let's understand this with an example. Let's say you are at your home and planning to leave for your office. You can start the car from your phone and turn on the air conditioner, so the car is at optimum temperature by the time your journey starts.

Once in the car, in case you forget to turn off any light switches, you can switch them off with the help of your phones.

All this is possible because of IoT. Since all the devices are connected to a network, you are able to operate them easily.

IoT is a very useful technology. Individuals, firms, and big enterprises are using it to save time, energy, and cost of doing a task.

It is expected that the Indian IoT market could grow at a compounded annual growth rate (CAGR) of 14.2% between 2023-2028.

Keeping that in mind, we have shortlisted the top five IOT companies that are prime beneficiaries.

#1 Kellton Tech

First on the list is Kellton Tech.

Kellton Tech is a leading IoT mobile application development company. Through its products and services, the company fulfils its client's diverse IoT requirements.

The company develops IoT applications for mobiles and smart devices to turn data into efficient business assets.

It offers Industrial IoT solutions using big data analytics and machine learning to build a data-driven organisation.

The company also develops IoT platforms for its clients to help run their businesses smoothly.

Some of its IoT products include Optima and KLGAME. Optima is an IoT-enabled digital analytics platform that helps you gather real-time data and generate actionable insights.

KLGAME is an IoT solution that enables its clients to deliver rich user experiences by leveraging Bluetooth technology.

The company has delivered over 250 IoT projects to over 100 clients across 15 countries in the last fifteen years.

Apart from IoT solutions, the company also offers other digital transformation services such as agile software development, technology consulting, digital commerce & marketing, professional services, outsourced product development, testing & automation.

Some of its clients include Walmart, Coca-Cola, Du Pont, and Luminous.

At present, the company is investing heavily in IoT platforms, digital transformation, and software engineering.

In the last three years, Kellton Tech's revenue has grown at a CAGR of 2.9%, driven by its diversified revenue stream. It reported a net profit of Rs 704 million (m) in the financial year 2022.

The company's return ratios have improved in the past three years with return on equity (RoE) and return on capital employed (RoCE) coming in at 14.8% and 19.4%, respectively.

Just like the other IT stocks, Kellton Tech's shares have fallen close to 30% in the last one year.

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Going forward, the company's investment in advanced technologies such as IoT, blockchain, and artificial intelligence (AI) will drive its growth in the medium term.

To know more, check out Kellton Tech's financial factsheet and latest quarterly results.

#2 Happiest Minds

Second on the list is Happiest Minds.

The company offers digital transformation services using disruptive technologies such as artificial intelligence (AI), IoT, blockchain, cloud, and digital process automation.

It offers comprehensive IoT services to industries and enterprises to enhance and unlock their true potential.

Some of their IoT service offerings are consulting, platform development, end-to-end system integration, security, testing, and managed support services.

Happiest Minds IoT solutions include Anomaly Detection, which uses statistical and AI algorithms to identify outliers, and real-time tracking through IoT, ensuring the delivery process optimisation.

The company also developed an IoT platform named MIDAS which will help businesses leverage the hidden information in their databases.

It also ensures IoT adoption across all stages of business, including conceptualisation, productisation, and operationalisation.

The company's focus areas are smart industries such as manufacturing, and energy, smart living such as wearables, healthcare, and security, and smart enterprises such as smart homes, buildings, offices, and retail.

Happiest Minds has over 50 partners, including Intel, Azure, and WindRiver, that help the company deliver best-of-class IoT solutions.

The company is investing in a new campus in Bhubaneshwar and expanding its employee capacity.

It also made a strategic investment in Tech4TH, a consulting-led technology company focused on the travel and hospitality industry, to expand its presence in the said industries.

In the last three years, its revenue has grown at a CAGR of 16.6%, driven by growth in digital offerings. The net profit has grown at a CAGR of 36.2%.

As a result, the company's RoE and RoCE have consistently improved and currently stand at 27.4% and 37.7%, respectively.

In the last one year, shares of Happiest Minds Technologies have fallen by 13% due to unstable macroeconomic conditions, and geopolitical tensions.

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Going forward, the company's continuous investment in innovation and growing demand for digital transformation services will drive its growth in the medium term.

To know more, check out Happiest Minds' financial factsheet and latest quarterly results.

#3 Zensar Technologies

Third on the list is Zensar Technologies.

It is a leading technology and digital solutions company that offers a range of integrated information technology (IT) and business process outsourcing (BPO) products and services.

The company operates in two segments digital and application services and digital foundations services.

Zensar Technologies provides IoT platforms as a service (PaaS), analytics, and modelling technologies.

It also offers a range of IoT solutions such as business intelligence and data warehousing, remote infrastructure management, testing, software application planning, development, migration, and support.

The company majorly offers its IoT services to manufacturing, hi-tech, banking and financial services, insurance, retail, and consumer services industries.

At present, it is present in India, the USA, the UK, Europe, and Africa. The company plans to expand its geographical reach by including more offerings for existing and new verticals.

In the last five years, the company's revenue has grown at a CAGR of 6.5%, driven by new deal wins across different verticals. The net profit has grown at a CAGR of 11.3%.

The RoE and RoCE have significantly improved in the last five years and currently stand at 15.8% and 22.9%, respectively.

It also has a history of paying consistent dividends to its shareholders.

Take a look at the company's share price performance in the last one year.

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Going forward, the company's plan to expand to new geographies and offer its clients innovative solutions using emerging technologies will drive its growth in the medium term.

To know more, check out Zensar Technologies' financial factsheet and latest quarterly results.

#4 Saksoft

Next on the list is Saksoft.

It is a digital transformation solution provider offering industry focussed technology solutions.

Through its IoT services, the company helps its clients develop enterprise applications, modernise their legacy systems, migrate their applications and servers to the cloud, and support and maintain their IT systems.

It also helps clients make data-driven decisions through data services and augmented analytics capabilities.

Apart from these services, the company also provides testing and security management services to its clients.

It currently has offices in fourteen strategic locations in the USA, Europe, and Asia-Pacific areas.

At present, its key verticals are fintech, healthcare, utilities, logistics and transportation industries. It plans to penetrate deep into these verticals by offering innovative solutions.

The company also plans to expand its geographical to other countries and continents.

In the last three years, its revenue has grown at a CAGR of 10.7%, driven by growth in existing business verticals. The net profit has grown at a CAGR of 17.8% during the same time.

The RoE and RoCE stood at 20% and 26%, respectively. It also pays consistent dividends.

Despite geopolitical tensions, and unstable economic conditions, Saksoft's shares have zoomed more than 120% in the last one year.

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Going forward, the company's expansion plans and the growing demand for innovative business solutions will drive its growth in the medium term.

To know more, check out Saksoft's financial factsheet and latest quarterly results.

#5 Tata Elxsi

Last on the list is Tata Elxsi, a Tata Group company.

The company is among the world's leading design and technology services providers across industries, including automobile, broadcast, communications, healthcare, and transportation.

Its products have a prominent use in a number of products, including home appliances, mobile phones, cars (especially electric vehicles), medical equipment, and more.

Tata Elxsi also provides an advanced driver-assistance system (ADAS) technology platform to automotive original equipment manufacturers like Tata Motors.

Even though it's one of the smallest segments, IoT is one of its most promising business segments.

It focuses on the application of technologies like cloud, mobility, virtual reality, and artificial intelligence to design advanced products for its customers through its end-to-end IoT solutions.

The company helps build next-generation products from scratch by bringing in a unique combination of design, engineering, and technology.

This is why Tata Elxsi is one of the preferred IoT partners for all its clients. The company also has expertise in launching a connected vehicle program across electric, passenger, and commercial vehicle segments.

All this makes Tata Elxsi a strong contender, well-poised to ride the wave in the IoT space.

Apart from the domestic market, the company has a presence across the USA, Europe, Asia Pacific, and Japan. It plans to expand to new geographies to grow its business.

In the last three years, Tata Elxsi's revenue has grown at a CAGR of 8.5%, driven by new deal wins and a diversified and reputed client profile. The net profit has grown at a CAGR of 16.5% during the same year.

The Tata group company also has stellar return ratios with RoE and RoCE coming in at 34.3% and 47.2%, respectively.

The company also pays consistent dividends to its shareholders with a five-year average dividend payout ratio of 45.4%.

Despite being consistent in its financial performance, shares of the company have fallen around 10% in the last one year due to unstable macroeconomic conditions.

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Going forward, continuous innovation and its plans to expand its business will drive the company's growth in the medium term.

To know more, check out Tata Elxsi's financial factsheet and latest quarterly results.

Snapshot of Internet of Things (IoT) Stocks on Equitymaster's Indian Stock Screener

Here's a quick view of the above companies based on their financials.

Here are the top IoT companies in India that are shaping the future.

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Please note that these parameters can be changed according to your selection criteria.

This will help you identify and eliminate stocks not meeting your requirements and emphasise those stocks well inside the metrics.

In conclusion

IoT is gaining momentum everywhere.

It is expected that there will be over 22 billion (bn) connected devices in the world by 2025 that will share data on IoT platforms.

All industries, including manufacturing, telecommunication, retail, health, and fitness, are using IoT to manage their business. The Indian government is also adapting IoT in its smart cities plan.

Safe to say that this will continue to be a story over the coming years. IoT is poised to be the defining narrative of the future - a grand, towering story that demands significant effort and bears weighty expectations.

However, one should treat IoT stocks with the same caution as other stocks. Track IoT stocks closely and keep a watch on their developments.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...


FAQs

Which are the top Internet of Things(IoT) stocks in India?

Based on stock screener, these are the top Internet of Things stocks in India:

You can see the full list of Internet of Things(IoT) stocks here.

What is Internet of Things (IoT)?

The Internet of Things (IoT) refers to the network of physical objects or "things" that are embedded with sensors, software, and connectivity, allowing them to collect and exchange data with other devices and systems over the internet. These can be anything from everyday objects like home appliances and vehicles to industrial equipment and infrastructure.

IoT technology enables these objects to communicate with each other and with humans, creating a web of interconnected devices that can be remotely controlled and monitored. This can improve efficiency, safety, and convenience in many different areas, from healthcare and transportation to home automation and energy management.

IoT devices can range from simple sensors that monitor temperature or humidity to complex systems that integrate data from multiple sources to make intelligent decisions.

How should you value Internet of Things (IoT) stocks?

Investing in stocks requires careful analysis of financial data to find out a company's true worth. However, an easier way to find out about a company's performance is to look at its financial ratios.

Two commonly used financial ratios used in the valuation of stocks are -

Price to Earnings Ratio (P/E) - It compares the company's stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.

Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.

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