Monopolies are firms that dominate the market. monopoly companies are those which have no or less market competition due to a single-player presence. Monopoly companies benefit from economies of scale leading to lower average costs. These companies usually control the market and are solo or large players in the market.
Here are three monopoly stocks in India that have more than 85% market supremacy.
Coal India Limited(CIL):
Coal India Ltd is engaged in the mining and extraction of coal in India. The company also produces several grades of non-coking coal and coking coal. The company serves thermal power generation companies, steel and cement factories, and other public and private industrial companies.
It is a large company with a market capitalization of Rs 1,40,294 crore. The company’s shares were trading at Rs 227.65 apiece on June 9th.
Coal India accounts for 87% of overall coal production in India, and its companies produced 622.63 million tonnes of coal during 2021-22, accounting for 84% of India’s thermal coal. According to the Coal Ministry, Furthermore, the business intends to boost all of India’s coal production to 1 billion tonnes by 2023-24.
Motilal Oswal gave a ‘Buy’ tag to the company with a target price of Rs 290 indicating an upside of 27 per cent as compared to the current price levels.
The rationale behind the recommendation is that the company has raised prices by 8%, resulting in additional revenue of INR 27 billion in FY 24. and the company has set a 780 mt coal production target.
According to the company’s financial statements. Operating sales rose from Rs 1,09,713 crore in FY 21–22 to Rs 1,38,251 crore in FY 22–23, Net profit grew from Rs 17,387 crore to Rs 28,133 crore within the same time period.
Indian Railway Catering & Tourism Corp Limited (IRCTC):
The Indian Railway Catering and Tourism Corporation (IRCTC) is a Central Public Sector Enterprise of the Government of India’s Ministry of Railways. The IRCTC was founded on September 27, 1999. Catering and hospitality services are provided by the company at railway stations and on trains.
It is a large company with a market capitalization of Rs 51,212 crore. The company’s shares were trading at Rs 640.15 apiece on June 9th.
Indian Railways has a monopoly on the Indian railway business with a 100% market share. This makes it a monopoly as consumers have no other alternative.
IDBI capital gave a ‘Buy’ tag to the company with a target price of Rs 740 indicating an upside of 15 percent as compared to the current price levels.
The rationale behind the recommendation is that Analysts anticipate that catering will drive growth, driven by increasing food pricing, while the establishment of additional trains and circuits will improve tourism revenues. Analysts expect the business to achieve margins of 36.3% in FY24 and 35.8% in FY25.
According to the company’s financials, operating revenues increased from Rs 1,879 crore in FY 21-22 to Rs 3,541 crore in FY 22-23. Over the same time period, Net profit increased from Rs 663 crore to Rs 1,005 crore.
Nestle India Limited:
Nestle India Limited is engaged in the food business. It is the world’s leading Nutrition, Health, and Wellness Company. The Company’s brands include NESCAFE, MAGGI, MILKYBAR, KIT KAT, etc.
It is a large company with a market capitalization of Rs 2,12,822 crore. The company’s shares were trading at Rs 22,073 apiece on June 9th.
Nestle India enjoyed a strong position, with more than 50% market share in most of its product categories in India. It controls 96.5% of the market for cerelac, as well as 20% of the global market in the infant formula segment.
Geojit BNP Paribas gave a ‘Buy’ tag to the company with a target price of Rs 23,380 indicating an upside of 6 percent as compared to the current price levels.
The rationale behind the recommendation is that the company is developing an Rs. 5,000 crore investment strategy for the next three years and is concentrating on capacity growth. Its RURBAN plan contributed significantly to growth, at 25-26%, with a footprint covering 91,000 villages in 2022. In fact, rural markets contribute 20% share of the revenue.
According to the company’s financials, operating revenues increased from Rs 3,980 in Q4FY22 crore to Rs 4,830 crore in Q4FY23. Over the same time period, Net profit increased from Rs 594 crore to Rs 736 crore.
Written by Omkar C
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