If somebody has complete control of something like a commodity or an area, due to which others have no share and ultimately no competition. What would you call him/her? A monopolist! Why? Because that person has a monopoly in the market. Being an enthusiast of trade and marketing, you must have heard of the term “monopoly” in stock markets too. In the area of business, the meaning of monopoly remains the same. In this article, we are going to explore the “10 Best Monopoly Stocks in India-2023.” Let’s begin!
What are Monopoly Stocks?
“Monopoly Stocks” refer to the stocks of those companies that stand solo in the market with negligible or without competition. Even though a stock market consists of a variety of companies belonging to different sectors, some of the companies are monopolists. Sounds as if they are the “Kings” of their respectable sectors! Isn’t it? Yes! That’s somewhat true. Because they have complete control over the production, supply, and pricing of their products or service.
Let me explain to you with an example. In India, how do you book train tickets? Of course through IRCTC. Do you know any other company or institution with which you can book train tickets? Quite difficult to find, no? Because no other such institution/company exists in India with which you can book the tickets for railways. The IRCTC is especially associated with the Ministry of Railways in the Indian government. Hence, you will never find its competitors. This is the perfect example of a monopolist company. Thus, the stocks of IRCTC are called “monopoly stocks.” There are many other similar examples. You will find it in the next section.
An Overview of Best Monopoly Stocks in India
|S. No.||Monopoly Stock||Category||Percentage of Market Share||Market Capitalization (INR in Billions)|
|1.||IRCTC (Indian Railway Catering and Tourism Corporation Ltd)||Ticketing Business||100%||511.96|
|2.||HAL (Hindustan Aeronautics Ltd)||Defense Manufacturing||100%||830.95|
|3.||Nestle India Ltd||Cereals, food, beverages, chocolate, and confectioneries Industry||96.5%||1,905.96|
|4.||IEX (Indian Energy Exchange)||Short-term Electricity Contracts||95%||127.40|
|5.||MCX (Multi Commodity Exchange of India Ltd)||Commodities Exchange Sector||92%||80.17|
|6.||Coal India Ltd||Coal Production||82%||1,319.44|
|7.||Hindustan Zinc Ltd||Zinc Industry||78%||1,480.00|
|8.||ITC (Imperial Tobacco Company of India Ltd)||Cigarettes||77%||4,094.20|
|9.||Marico Ltd||Oil Products||73%||642.24|
|10.||CAMS (Computer Age Management Services Ltd)||Mutual Fund Industry||70%||112.12|
1: IRCTC (Indian Railway Catering and Tourism Corporation Ltd)
The acronym “IRCTC” refers to the Indian Railways Catering and Tourism Corporation. It is a subsidiary of Indian Railways. The Indian Ministry of Railways established IRCTC on September 27, 1999. Their objectives were to manage the catering of hospitality services, booking of online and offline tickets, modernizing tourism operations, bottled water, hotel rooms, affordable tour packages, and the list goes on. Do you know that it is a Miniratna public corporation that has a certain degree of financial autonomy? It is a Central Public Sector Enterprise that falls entirely under the Indian government. Also, it has an online platform i.e. www.irctc.co.in. Currently, its market cap value is INR 511.96 billion. Consequently, it has a monopoly in the railway sector. Hence, it generates its revenue from the ticketing system, catering businesses, tourism, Rail Neer packaged water, and other businesses.
2: HAL (Hindustan Aeronautics Ltd)
Have you heard about the aircraft names like SU-30 MKI, ALH- Dhruv, Chetak, Cheetal, etc.? All these aircraft were manufactured indigenously, i.e., in our country- India. HAL manufactures them. Hindustan Aeronautics Limited (HAL) is another major monopoly stock in the Indian defense sector. It represents the aviation industry of our country. Do you know that it is one of the oldest aerospace defense manufacturers? In the year 1940, Walchand Hirachand and the Government of Mysore established it to manufacture indigenous aircraft. At the present time, it is associated with the design, fabrication, and assembling of the parts of airplanes, jet engines, and helicopters. It holds 100% of the market share and has a market capitalization of INR 830.95 billion.
3: Nestle India Ltd
What is the most common brand name that you saw in the category of baby foods? Isn’t it “Cerelac”? You will rarely find a home having a baby or a toddler who does not have a box of cerelac. But why only cerelac and not any other brand? Now tell me, what is the favorite fast food of Indians? Isn’t it Maggie? Various brands come and go but no one can give tough competition to Maggie. Do you know why?
The reason is the monopoly of Nestle. Cerelac and Maggie belong to Nestle, a company associated with nutrition, health, and wellness. Even though it was set up in Switzerland in the year 1886… But it spent more than half of its lifetime in markets of India. Even though it is an undisputed market leader in this segment. But, it produces a wide range of products ranging from milk products to confectionaries. Also, the market share and market capitalization of Nestle are 96.5% and 1,905.96 respectively.
4: IEX (Indian Energy Exchange)
The Indian Energy Exchange (IEX) is an online trading and settlement platform for electricity and electrical operations. The CERC (Central Electricity Regulatory Commission) regulates it and also provides REC (Renewable Energy Certificates) and ESCerts (Energy Saving Certificates). As you know, being the only and largest electricity exchange in India, it is a monopoly stock. Because most of its transactions occur by trading electricity, green energy, and renewable energy. Thus, IEX has a 95% monopoly in the segment of energy exchange and a market capitalization of INR 127.40 billion.
5: MCX (Multi Commodity Exchange of India Limited)
Do you know the first exchange of India that was publicly traded? The answer is MCX i.e., Multi Commodity Exchange of India Ltd. You can easily trade commodity derivatives through online transactions of MCX. Also, you can trade a wide range of commodities through it like precious metals (gold, silver, platinum), energy & base metals. Since SEBI (the Security and Exchange Board of India) regulates it, you do not need to worry about safety and security. It earns revenue from the trade of gold, silver, natural gas, crude oil, nickel, copper, and zinc. Thus, its market cap is INR 80.17 billion.
6: Coal India Ltd
Coal India Ltd is the second-largest producer of coal globally. Because it produces around 729 million tonnes of coal. Even though the Union government of India owns Coal India Limited. But the Ministry of Coal manages it. Correspondingly, it has a market share of 82%. Thus, it is a monopoly in the coal production industry. Besides power and steel sectors, the brick kiln industry, fertilizer, and cement-producing industries are the major consumers of Coal India Ltd. Basically, it involves the mining and production of coal along with the operation of coal washeries. Presently, its market capitalization is INR 1,319.44 billion.
7: Hindustan Zinc Ltd
Let me tell you an amazing fact. Hindustan Zinc Ltd has acquired the second position globally in terms of zinc-lead mining. Thus, it is a monopolist company with a market share of 78% and a market cap of INR 1,480.00 billion. Eventually, the Metal Corporation of India incorporated it in the year 1966 through a public sector undertaking. Altogether, it comprises the mining and smelting of metals like zinc, lead, cadmium, and silver.
8: ITC Ltd (Imperial Tobacco Company of India Limited)
The most successful cigarette manufacturer in India is Imperial Tobacco Company of India Limited (ITC Ltd). Chiefly, it conducts almost five business operations- FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri-Business. Thus, it is a dominant player in the domestic cigarette market. Because its market share is 77% and market capital of INR 4,094.20 billion. Its headquarter is present in Kolkata. Chiefly, it exports its products to around 90 countries in the world. Evidently, the high demand for cigarettes and the association with government regulations have immensely helped the ITC become a monopolist in the market.
9: Marico Ltd
When it comes to coconut oil, the first thing that pops into our mind is “Parachute Coconut Oil.” Another brand that dominates the market of refined oil is “Saffola.” Do you know that both of these brands are part of Marico-Oil Products? It has been just three decades since Marico Limited came into existence. Even though it is associated with the manufacturing, marketing, and selling of personal care products. Hence, it has maintained its market leadership with a dominating share of 73%. Thus, it is one of the well-known FMCG companies (Fast-moving consumer goods). Also, it consists of a good number of household brands like Hair & Care, Nihar, Livon, Set Wet, Mediker, Revive, Parachute, Saffola, etc. Thus currently, it possesses a market capitalization of INR 642.24 billion.
10: CAMS (Computer Age Management Services Ltd)
It deals with the transfer of mutual fund assets. Therefore, it offers targeted services to investors, distributors, and asset management companies (AMCs). Also, it is the largest mutual fund registration and transfer agency with a market share of 70%. Even though it was established in 1988 as a small-cap company. But now, the market capitalization of CAMS is INR 112.12 billion. Also, its headquarter is present in Chennai.
Advantages & Disadvantages of investing in monopoly stocks
After going through the above list, aren’t you curious to know whether to invest in monopoly stocks or not? This section will answer your curiosity.
Look… just like every coin has two faces… monopoly stocks also come with a series of advantages and disadvantages. The monopolist stocks belong to companies that do not have any competition. So, they offer massive profits to investors. Thus, the profits increase massively if the investors hold the stocks for a long time.
However, on the flip side, there’s a risk that due to certain changes in policy or natural events, the whole company’s business can get affected at once. For example: When Covid-19 took place, in the summer of 2020, the whole country came to a dead stop. Hence, most of the trains were stopped affecting the business of IRCTC drastically. Similarly, if the government decides to implement a nationwide ban on tobacco products, the major segment of ITC will fail.
The primary sellers of monopolist companies become the market leaders. They solely decide the price of the products, services, and stocks. You cannot go against their decisions even if it causes you some financial losses. Thus, you should check the following things before investing in monopoly stocks-
- Historical performance
- Governmental support
- Future goals
Monopoly companies enjoy the benefits of “no competition.” They are the favorite stock for investors because their returns on investment seldom suffer from competition. Thus, in most cases, the monopoly stocks have a bright future.