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Top 3 AI Stocks in India 2024 for Long-Term Investments
Table of Contents
Introduction
Today, we are going to discuss an exciting topic that has been in high demand among investors - AI stocks. In recent times, there has been a surge in demand for various types of stocks, including undervalued PSU stocks, defense stocks, monopoly stocks, and high-growth railway stocks. Today, we will focus on AI stocks and explore the potential investment opportunities they offer.
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Leading brokerage houses like JP Morgan and Morgan Stanley, as well as major companies like Adia and Microsoft, have recognized the enormous potential of AI. The significant returns generated by these companies in just one year have caught the attention of investors worldwide. Let's take a closer look at the data to understand why AI stocks are gaining so much traction.
The Valuation Story of AI Stocks
When we compare the valuation of emerging markets, such as India, with that of the US, an interesting pattern emerges. Valuations in emerging markets, including India, are much lower than those in the US. This presents a significant opportunity for investors who are looking to capitalize on the growing adoption of AI technology. Although India is still in the early stages of AI and semiconductor development, it is clear that the country is making steady progress in these sectors.
As countries worldwide focus on AI, artificial intelligence, semiconductors, EV, and green energy, it is essential to identify the stocks that offer the most potential for growth. According to the Deputy CIO of Morgan Stanley, the semiconductor industry has been the biggest beneficiary of AI so far. However, the focus is now shifting towards industries that are leveraging AI to increase their earnings.
Finding the Right AI Stocks to Invest In India :
Given the rapid growth and potential of AI, it is crucial to identify companies in India that are at the forefront of AI adoption. Let's Look At the Top AI Stocks to Invest in 2024
1- Kellton Tech Solutions :
One such company identified by a leading brokerage house is Kellton Tech Solutions. Apart from IT services, Kellton Tech Solutions offers digital transformation and ERP services. The company boasts an impressive order book of Rs 800 crore for 2024.
When we analyze Kellton's products, we find that digital transformation contributes 82% to their revenue. This indicates the company's strong foothold in the digital space. By breaking down the vertical revenue, we can see that information services technology accounts for 30.4%, professional services accounts for 15%, and healthcare accounts for 14%.
2- Zensar Technologies :
Another company worth considering is Zensar Tech, based in Mumbai. Zensar Tech provides digital solutions and tax services. The company specializes in application development, maintenance support, modernization, and testing services. Their digital foundation services include digital workspace, dynamic securities, and IT-related services.
When we analyze Zensar Tech's revenue, we find that 81.5% comes from digital application services, while 18.5% comes from digital foundation services.
From a technical standpoint, Zensar Tech's price action is currently in a consolidation phase. There is a potential breakout level that investors should monitor closely.
3- Affle India :
Finally, let's discuss Affle India Company, a global technology company that offers a consumer intelligence platform. This platform helps convert ads into recommendations, with a focus on both online and offline businesses. Some of their key clients include Swiggy and Fossil.
Affle India Company generates 98.4% of its revenue from the consumer platform and 95.8% from its CPCU business. This indicates a strong market presence and potential for growth.
From a technical perspective, Affle India's price action indicates a consolidation phase with a potential breakout level. Investors should pay close attention to this stock.
Understanding the Components of AI
Now that we have discussed some potential AI stocks in India, it is essential to understand the components of AI and how they contribute to the growth of these companies. There are four main components of AI: deep learning, machine learning, edge learning, and natural learning.
Deep learning has captured the largest market share, followed by machine learning. Edge learning and natural learning have smaller market shares. This information helps us identify the areas where companies are focusing their AI efforts.
Investing in the Future
As we invest in AI stocks, it is important to consider the fundamentals of the companies we choose. Looking at the price-to-earnings ratio (P/E), we can see that Kellton Tech Solutions has a P/E ratio of 21.8, which indicates that the stock is relatively undervalued. Zensar Tech, on the other hand, has a P/E ratio of 22.4, also suggesting undervaluation. Affle India Company has a P/E ratio of 55.5, indicating a higher valuation.
When analyzing the profit and loss statements of these companies, we should pay attention to their operating profit margin (OPM) percentage. Kellton Tech Solutions has maintained an OPM percentage of around 14-15%, while Zensar Tech's OPM percentage has fluctuated between 11% and 17%. Affle India Company has maintained an OPM percentage of around 20%.
It is also important to consider the shareholding patterns of these companies. Kellton Tech Solutions has a promoter holding of 52.1%, while Zensar Tech has a promoter holding of 49.20%. Affle India Company has a promoter holding of 56.2%. Additionally, the interest of FIIs and DIs in these companies adds further credibility.
Conclusion
AI stocks have gained significant popularity in the Indian market due to their potential for growth and innovation. Companies like Kellton Tech Solutions, Zensar Tech, and Affle India Company are at the forefront of AI adoption in India. By understanding the components of AI and analyzing the technical and fundamental aspects of these companies, investors can make informed decisions and potentially benefit from this growing market.
Remember, investing in AI stocks requires careful analysis and monitoring. As the Indian market continues to grow in the AI sector, it is crucial to stay updated with the latest trends and developments. By doing so, investors can position themselves for substantial returns in the future.
Disclaimer: This Stock Analysis is only for informational purposes and should not be considered as investment advice. Always do your research and consult with a financial advisor.
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Frequently Asked Questions
The role of AI in financial markets is significant, revolutionizing trading, risk assessment, fraud detection, and customer service through advanced algorithms and data analysis, enhancing efficiency and decision-making.
AI offers numerous benefits to the financial sector, including increased efficiency in trading operations, more accurate risk prediction models, better fraud detection mechanisms, and enhanced customer experience through personalized services and support.
AI empowers financial professionals with data-driven insights, enabling more informed decision-making processes. By analyzing vast amounts of financial data in real-time, AI algorithms can identify patterns, trends, and opportunities that human analysts might overlook, leading to better investment strategies and risk management
The best AI stocks offer investors opportunities to capitalize on the rapidly growing artificial intelligence sector. Companies like Kilton Tech Solutions, Jinus Tech, and L India Company are among the top picks, showing promising growth potential and innovative advancements in AI technology.
