Best Monopoly Stocks in India To Buy in 2024
Best Monopoly Stocks in India To Buy in 2024
Whenever you invest in a stock, you always look out for the best monopoly stocks in India in their sector. There are many qualities you need to watch out for before investing such as their business model, management, future growth prospects, and financials but there’s another crucial factor that gives a company the competitive edge that could enable them to beat its competitors which is an economic moat.
What are Monopoly Stocks?
Monopoly stocks are stocks of companies that operate in a market where they have a dominant position, which allows them to control the supply and price of their products or services. These companies typically have a competitive advantage over their rivals, which can be due to several factors such as patents, brand recognition, economies of scale, or government regulations.
Investing in monopoly stocks in India can be profitable as they tend to generate high profits and have a stable business model and therefore can be a good option to include in a coffee can investing. However, it's important to note that these stocks can also carry risks, such as regulatory changes or new competitors entering the market. It's important to conduct thorough research and analysis before investing in any stock, including monopoly stocks.
Monopoly stocks in India are one of the safest investments for Government employees to invest in the share market.
What is an economic moat?
Have you ever wondered why most people buy iPhones even when lots of other phones more or less do the same thing or why YouTube is pretty much the only popular video platform that everyone uses? It is mainly because these companies have what Warren Buffet popularly calls an economic moat.
The economic moat refers to the competitive edge a business has over its competition in terms of huge capital, government restrictions, or other business advantages.
The companies having this economic moat enjoy a monopoly in their industry are called monopoly stocks
These monopoly stocks are good for long term investment. therefore you should invest early in the stock market to leverage the power of compounding.
Best Monopoly stocks in India
Let’s analyze some of the Best Monopoly stocks in India in their own sectors with an economic moat according to their market capitalization.
Small Cap Monopoly Stocks Companies
Small-cap monopoly companies in India are those that have a market capitalization of Rs.5000 crore or less. These types of companies are potential blue-chip companies of the future with bright future prospects and whose full potential has still not been recognized by investors. Some of the best monopoly stocks in India in their respective industry are:
1). Mold Tek Packaging
Mold Tek packaging is involved in the manufacturing of injection-molded containers for paints, food, lubes, and various other products. Mold Tek is well-known for its reliability and quality which has helped it earn the trust to become a preferred supplier of major companies in the Paints, Lubes and Food & FMCG industries.
The main competitive advantages of Mold Tek are:
In-house robots: The robots, machines, and tools which are used to package products are built in-house by Mold Tek contrary to its competitors which import these robots from outside which gives them a really strong economic moat against their competitors.
Green channel clearance: Mold Tek has received a “Green channel clearance” from a few companies which means that pails supplied by Mold Tek will directly go to the filing line of these companies without quality checks which shows their trust in Mold Tek.
2). Lumax Industries Ltd
Lumax is the flagship company of the DK Jain Group and it has emerged as the market leader of automobile lighting in the Indian automobile industry. It has a 60% market share in the PV segment and is the largest supplier of automotive lighting solutions in the country.
Maruti is their top client and contributes around 36% of its revenues whereas the other leading players such as Hero Moto Corp, M&M, and Honda constitute around 40% of its revenue.
Mid-Cap Monopoly Stocks companies
Mid-cap monopoly companies in India are middle-size companies with a market capitalisation of more than Rs.5000 crores and less than Rs.20,000 crores. These are already established companies that have the potential to become large-cap companies. Some of the companies that have a monopoly among the mid-cap companies are:
3). Deepak Nitrite
Deepak Nitrite is the leading manufacturer of organic, inorganic, fine, and specialty chemicals. It is a chemical manufacturing company situated in Gujarat and has a 75% market share in sodium nitrite, sodium nitrate, and NitroToluenes in India.
It is the largest manufacturer of sodium nitrite to major petroleum refineries such as Indian Oil, Bharat Petroleum, Reliance, and others and its revenue growth and profit growth of 5-year CAGR have been 15.8% and 35.4% respectively. Deepak Nitrite is considered one of the best chemical stocks in India.
4). Computer Age Management services
It is a mutual funds transfer agency that provides investor services, distributor services, and asset management companies (AMC) services. They have a stable technology-enabled ecosystem that enables them to handle huge transactions which gives them a competitive edge over their competitors.
They are the biggest player in the RTA (Registrar & Transfer Agents) business with a 70% market share and with highly efficient management. They have a strong distribution network with 271 service centers spread across 25 states.
Large-Cap Monopoly Stocks Companies
Large-cap monopoly companies in India are companies with well-established businesses and a strong brand presence in the market. Companies with a market capitalization of Rs.20,000 crores or more are considered to be large-cap companies. Some of the large-cap monopoly companies in their respective sectors are:
5). Hindustan Aeronautical Limited (HAL)
Hindustan Aeronautical is one of the most expensive stock and best defence stocks in India and deals in the business of manufacturing Aircraft and Helicopters and the Repair, Maintenance of Aircraft and Helicopters. HAL was established in the year 1940 and plays a very critical sector in the Indian defense sector. The company is almost debt-free as its external debt is fully paid up and has healthy cash balances.
6). Asian Paints
Asian Paints was established in the year 1942 and are leading paint manufacturer in India and also deals in the business of varnishes, lacquers, enamels, composite solvents, and thinners.
Focused on strong supply chain management, the success of Asian Paints is credited to a strong and successful brand name. Investing heavily in technology and IT in the 1970s helped the company to create an excellent product and understand its customers better which gave them a strong competitive edge over its competitors.
These are some of the top monopoly stocks in India in their respective industries according to their market sizes. Companies with strong economic moat can prove to be a multi-bagger for investors and value investors are always on the lookout for such stocks. But you need to be careful as these companies being a strong player in their areas can be sometimes overvalued which can eventually lead to negative returns or losses in the future for investors.
Que 1. Which are the top monopoly companies in every sector?
- Paint Sector: Asian Paints Ltd
- FMCG Sector: Hindustan Unilever Limited
- Aerospace and Defence Sector: Hindustan Aeronautics India
- NBFC sector: Bajaj Finserv Limited
- Banking Sector: HDFC Bank Limited
- Railways: Indian Railway Catering and Tourism Corporation (IRCTC)
- Mining sector: Coal India
- Footwear Manufacturers: Relaxo footwear
Que 2. Upcoming monopoly stocks in India.
Ans- Here is the list of upcoming monopoly stocks in India-
- KPIT Tech
- Happiest Minds
- Tata Power
Que 3. Which are the Monopoly Stocks In India 2021?
Ans. 1) IRCTC in Railway Sector
2). HAL in Defence Sector
3). Coal India in Coal Industry
4) Hindustan Zinc in Metal and Mining Industry
5) Pidilite Industries in Adhesives and Sealants Business
Que 4. Are monopoly stocks a good option for long-term investment?
Ans. Yes, monopoly stocks are a good option for long-term investment the reason behind is:
Market competition is low or absent for monopoly companies and because of having a big market share these companies become market leaders. In such cases, the monopoly companies can offer high profits to investors for the long term. However, the trader or investor must check the company's fundamental analysis which includes the historical performance, management, and future goals before deciding. You can use Tickertape to understand a stock better.