- The industry has high entry barriers
- The company has a distinct cost advantage
- New players will not be able to achieve the company’s scale and pricing
- The company has a proven track record of generating huge revenues compared to its peers.
- How does a company achieve a strong monopoly in the market?
- List of Monopoly stocks listed on the Indian stock exchanges
- Monopoly Stocks in detail - Indian Railway Catering and Tourism Corporation Ltd - Hindustan Aeronautics Ltd. - Indian Energy Exchange (IEX) - Multi commodity exchange(MCX) - Coal India
How does a company achieve a strong monopoly in the markets?Firstly, monopoly stocks have pricing power in their hands. What does this mean? Well, it simply means that even if the monopoly company decides to increase the prices of its goods or services, you will still buy their products. For example, imagine you want to buy a BMW car. BMW is a reputed car company. Owing a BMW is a status symbol. Now, even if BMW increases the price of its car, you will still buy it.Now the question is…what made you buy the product even at a high price? Well, it is simply the impact of a high switching cost.What is switching cost?It is the cost that the customer would incur to switch from one product to another. Companies with high pricing power and a wider moat make it tough for their customers to use a competitor's product by offering a unique features in their product. The unique feature is a competitive advantage and hence such monopoly stocks have a bright future.The second reason that makes monopoly stocks unique is the goodwill of the company.Let me ask you a question. Whenever you think about toothpaste, what is the first brand that comes to your mind…It’s Colgate, isn’t it? Similarly, while thinking about noodles, Maggi is the first product that comes to your mind.Monopoly companies have extraordinary brand recognition. That’s because they have invested a lot of time in adding a unique quality to their product. Not just that… the company has also invested a huge amount in marketing and building a huge distribution network.Because of these reasons, monopoly stocks have the ability to turn into multi-baggers in the future.
List of Monopoly Stocks Listed on the Indian Stock Exchanges 2022
|Monopoly stock||Percentage of market share in a segment||Current Price||Market Capitalization (Rs. in Cr)|
|IRCTC||100% in ticketing business||Rs. 786||Rs. 62,900|
|HAL||100% in defence manufacturing||Rs. 1,687||Rs. 56,398|
|IEX||95% of short-term electricity contracts in India||Rs. 237||Rs. 21,321|
|MCX||92% in India’s commodities exchange sector||Rs. 1,419||Rs. 7,239|
|Coal India||82% in coal production||Rs. 190||Rs. 117,153|
|Hindustan Zinc||78% in zinc industry||Rs. 351||Rs. 148,288|
|ITC||77% in cigarettes||Rs. 266||Rs. 327,799|
|Marico||73% in oil products||Rs. 518||Rs. 66,986|
|CAMS||70% within the mutual fund industry||Rs. 2,554||Rs. 12,491|
|Pidilite Industries||70% share in adhesive||Rs. 2,391||Rs. 121,519|
|CONCOR||68.52% in cargo carrier||Rs. 679||Rs. 41,362|
|Praj industries||60% in ethanol plant installation industry||Rs. 408||Rs. 7,500|
|BHEL||67% in the power equipment sector||Rs. 55.3||Rs. 19,256|
|CDSL||59% in depository business||Rs. 1,430||Rs. 14,943|
|APL Apollo||50% share in pre-galvanised and structural tube industry||Rs. 1,058||Rs. 26,485|
Let’s look at the each of these monopoly stocks in detail.railway sector. In the last quarter, the company had a total sale of Rs. 540 crores. Here is the revenue breakup of IRCTC –
- 57% revenue was generated from the internet ticketing segment.
- 19% from the catering business
- 10% from tourism
- 9.25% from the Rail Neer (packaged water bottle segment)
- 5% from other businesses
Indian Energy Exchange (IEX)
Multi Commodity Exchange (MCX)
- 3% revenue is generated from trading of silver contracts
- 27.3% revenue is generated from trading of gold contracts
- 13.2% revenue is generated from trading of natural gas
- 8.5% revenue is generated from crude oil
- 7.2% revenue is generated from trading of nickel contracts.
- 7% from trading copper contracts
- 3.2% from trading zinc contracts
Bottom lineWith this, we come to the end of the discussion on the best monopoly stocks listed on the Indian stock exchanges. In this article, we have discussed a few monopoly stocks and we have also provided a list of other monopoly stocks listed on the stock exchanges.Now if you are wondering which is the best monopoly stock which will mint money for you then you will have to research about each monopoly stock in detail and hold it for the long term.But when you are investing for the long term, you have to check a lot of things. This list includes analysing financial ratios, quality of the management, analysing future growth prospects of the company, and a lot more… And analysing each stock on these basis is time consuming. So, what is the solution to this?Simply invest through Stockbasket’s Largest Irreplacable Networks Basket which consists of nine monopoly stocks.This basket is specially curated with monopoly stocks which have a reliable network of distributors and are virtually irreplaceable.Here is a glimpse of the largest irreplaceable networks basket.
|United spirits Ltd.||9.45%|
|Multi commodity exchange (MCX)||10.01%|
|Indian energy exchange Ltd.||23.12%|