Today, we identify one of Warren Buffets’ favourite categories i.e. monopolies, but in the Indian markets. Monopoly refers to the category of companies who due to their major competitive advantage are market leaders in their industry.
These companies are very difficult to compete with and maintain the highest market share for their products and services. They are market leaders in their industry with zero or very little competition.
Let’s get started..............
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Top 10 Indian Companies with Monopoly
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Following are the list of monopolies in the Indian markets i.e. the
companies that enjoy the status of being a monopoly: (Company + Market
Share)
1. IRCTC – 100%
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IRCTC is a state-owned entity and the only player in the
Indian markets
that operate in the Industry. The company was founded in the year 1845.
Rail networks are generally considered as ‘ Natural Monopolies’. This is
because only one train can use the rack at a given time.
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The company has a 100% monopoly in this industry, however, earlier this
year
government
announced that it will be opening the sector for other players.
2. HAL – 100%
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The Hindustan Aeronautics India Limited represents the Indian aviation
industry and plays a very important role in the Indian defence sector. The
company was set up in 1940 by Walchand Hirachand and the Government of
Mysore to manufacture aircraft in India.
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Today the company is state-owned and is associated with designing,
fabricating, and assembling aircraft, jet engines, helicopters, and their
spare parts.
3. Nestle – Cerelac – 96.5%
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Cerelac is the brand of instant cereal made by Nestle for infants 6 months
and older as a supplement for breast milk. Nestle is one of the world's
leading nutrition, health, and wellness companies set up in 1866 in
Switzerland.
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It has spent more than a century in the Indian markets over the years has
become an undisputed market leader in the baby food segment. It has an
undisputed
market share
of 96.5% despite functioning in an open to all industry.
4. Coal India – 82%
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Coal India Limited is a coal mining and refining company. It is also the
world’s largest coal-producing company in the world. It is owned by the
Union
government of India
and is managed by the Ministry of Coal. The company contributes up to 82%
of the total coal production in India.
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This year, the government announced that the coal sector would now be
opening up for commercial mining, possibly ending its monopoly in the
future.
5. Hindustan zinc – 78%
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Hindustan Zinc Ltd. is the world’s second-largest zinc-lead miner and
holds a 78% market share in India’s primary zinc industry. The company was
incorporated as Metal Corporation of India in 1966 as a Public sector
undertaking.
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Today the company is a subsidiary of Vedanta Limited which owns a 64.9%
stake in the Company while the
Government of India
holds a 29.5% minority stake.
6. ITC - 77%
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Although the company has diversified into a conglomerate in the last
century. Despite this, its cigarette business still holds 77% a strong
position in the Indian markets.
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Apart from a market experience, another advantage that the brand has is
its supply chain and distribution network which spans across the country.
7. Marico – Oil Products – 73%
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Marico is one of the well-known FMCG companies in India but the majority
of its success lies in its two brands ‘Saffola’ and ‘Parachute’. The
company has come a long way in the segment despite being around for only 3
decades.
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Safola which competes in the premium refined edible oil segment has
maintained its market leadership with a share of 73%. ‘Parachute’ on the
other hand holds a market share of 59%. These also form up to 90% of their
income.
8. Pidilite – 70%
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Pidilite’s product range includes adhesives and sealants (Fevicol and
M-seal), construction and paint chemicals (Dr Fixit), automotive
chemicals, industrial adhesives, and industrial & textile resins. It
is the leader in the adhesive and industrial chemical market with a market
share of 70%.
9. CONCOR – 68.52%
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Container Corporation of India Limited (CONCOR) is a Public Sector
Undertaking managed by the Indian Ministry of Railways. The company was
set up in 1966 with the aim of containerizing cargo transport in the
country.
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Concor’s core businesses include that cargo carrier; terminal operator,
warehouse operator & MMLP operation. They hold a market share in
domestic business of 68.52% in 2019-20.
10. BHEL
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BHEL is India’s largest engineering and manufacturing enterprise in the
energy and infrastructure sectors and is also a leading power equipment
manufacturer globally.
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Its services and products range from power-thermal, hydro, gas. Nuclear
and solar PV, transmission, etc. It also holds the single largest market
share in the emission control equipment business in India
Closing Thoughts.......
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We discussed the list of Indian Companies with monopolies in their
Industry. For a
value investor, a monopoly or big Moat stock is similar to a gold mine.
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But investors must watch out as these stocks just like other Blue Chip
companies are generally overvalued and can lead to lower returns or
losses.
That’s all for today. Have a great day and Happy investing.
