AI Stocks In India With Strong Exposure To Software Defined Vehicle Growth

Artificial intelligence stocks are sitting at the crossroads of powerful themes that investors are watching right now. Global PMIs, energy prices, trade flows and inflation signals are all feeding demand for better data, automation and decision support, which is where AI stocks screener ideas can come into focus. The AI Stocks screener highlights companies tied to chips, software, cloud and large language models such as ChatGPT. It helps you cut through noise and focus on businesses directly linked to this trend. Below are three stocks from the screener that stand out for closer research.

Netweb Technologies India (NSEI:NETWEB)

Overview: Netweb Technologies India is a high end computing specialist that designs and manufactures supercomputers, AI systems, private cloud and data centre hardware, and related software and services for enterprise, government, defense, and research customers in India under its Tyrone brand.

Operations: Netweb Technologies India generates about ₹27,020.37 million in revenue primarily from the manufacturing and sale of computer servers.

Market Cap: ₹261.13 billion

Netweb Technologies India sits at the heart of the AI and high performance computing build out in India, supplying supercomputers, AI servers and cloud infrastructure to both government and enterprise clients. The company combines in house R&D with appliance based solutions that support solid margins and a high 36% ROE. Recent quarterly results show very large year on year gains in revenue and earnings. The flip side is meaningful reliance on large government and defense orders, working capital pressure from receivables and a rich valuation that assumes strong growth continues. For investors looking at AI infrastructure related businesses, one key question is whether this balance of quality, growth potential and concentration risk still stacks up at today’s price.

Netweb Technologies India’s high 36% ROE and role in India’s AI build out raise a clear question: Does the current price still reflect the full story, or is something important being missed in the 2 key rewards and 1 important warning sign?

KPIT Technologies (NSEI:KPITTECH)

Overview: KPIT Technologies builds embedded software, artificial intelligence and digital platforms that power modern cars, from autonomous driving and advanced driver assistance systems through to vehicle operating systems, charging and battery management for electric vehicles. Its customers are global automakers and mobility companies that need deep software expertise to manage increasingly complex, software heavy vehicles.

Operations: KPIT Technologies generates revenue from automotive and mobility software and services across the Americas, UK & Europe and the Rest of the World, with reported segment revenues of ₹18,505.6 million, ₹34,667.97 million and ₹32,112.67 million respectively, partly offset by ₹19,374.6 million of inter segment revenue.

Market Cap: ₹168.58 billion

KPIT Technologies sits at the center of the shift to software defined vehicles, with long standing expertise in safety critical automotive software that takes engineers years to build and helps keep employee attrition around 7%. That depth supported a 21% EBITDA margin for 22 consecutive quarters and a net cash position of about ₹9 billion even as the stock fell sharply after an earnings miss and margin pressure that took net profit margin to 8.8%. The company is trading on a P/E slightly below software peers, and investors are weighing the potential of higher margin fixed price and solutions work, new programs in India and China and the emerging cybersecurity business. The key question is whether recent setbacks or the long term software franchise matter more over the next few years.

KPIT Technologies has years of high margin software work and a net cash buffer, yet the recent earnings wobble has some investors hesitating. Get the full story in the 2 key rewards and 2 important warning signs

Tata Elxsi (BSE:500408)

Overview: Tata Elxsi is a Bengaluru based design and engineering company that builds software platforms and AI solutions for sectors such as automotive, media, telecom and healthcare, from autonomous driving and electric vehicle systems to OTT video, network automation and digital health platforms.

Operations: Tata Elxsi generates about ₹37,846.13 million in revenue from Software Development and Services and ₹1,018.22 million from System Integration and Support Services.

Market Cap: ₹234.05 billion

Tata Elxsi gives you exposure to both automotive and healthcare AI, backed by long term engineering deals and platforms like AutonomAI for self driving capabilities and digital health tools that support remote care. The company currently earns a 21.5% ROE and pays a 2% dividend. Margins have come under pressure from 20% to 16.7%, and the stock trades on a 35.6x P/E. A key consideration for investors is whether the quality of its AI led franchise and deal pipeline compensates for slower growth versus the wider market and a valuation that already prices in a lot of optimism.

Tata Elxsi’s 21.5% ROE, 2% dividend and 35.6x P/E suggest there is more to the story than the headline margins indicate. Get the context behind those expectations in the analysis report for Tata Elxsi

The three AI stocks in this article are just a starting point, since the full Artificial Intelligence/ AI Stocks screener surfaces 24 more companies with equally compelling narratives around chips, software, cloud and large language models. Use Simply Wall St to identify and analyze the specific catalysts and storylines that matter to you so you can focus on the opportunities in the AI theme that best align with your own views and preferences.

Take Control of Your Investment Journey

If KPIT Technologies or any of these companies have caught your attention, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value and track any new developments as they happen. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Alternatives Before The Crowd Moves

Fresh opportunities can move from quiet to flying under the radar in a heartbeat. Use focused screeners to identify candidates before momentum is fully recognized.

• Find potential value ideas using the curated 253 high quality undervalued stocks while the numbers still look appealing and the wider market has not fully reacted.
• Identify companies with stronger balance sheets by scanning the hand picked list of solid balance sheet and fundamentals (414 results) before financial stress concerns become widespread.
• Look for relatively lower volatility candidates with the targeted 304 resilient stocks with low risk scores and aim to keep potential drawdowns in check while they remain less widely followed.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com