Monopoly company means pioneer in its area. Monopoly companies are having highest market share in its sector for their products and services. Hence, it is very difficult for other companies to beat them. These companies give better yields in the long run. If any company offering a product with no substitute will become monopoly in that sector. The advantage of monopolies is an ensured consistent supply of a commodity that is too expensive to provide in a competitive market. However, there is a chance of manipulating the price and quality of the product as there is no competition in the Market. As the monopoly company offering products with little or no competition in the market, can therefore set its own terms and prices when facing consumers, making them highly profitable.
Advantages with Monopoly Companies:
Monopolies are highly sophisticated and hence lower average costs to the products
Because of higher profits, can allocate surpluses to R&D works
Steady growth rates, hence assured profits to the investors
Excellent future prospectus
Disadvantages with Monopoly Companies:
As there is no competition, consumers may face higher prices
There will be less inventive and inefficiency in products
Less choices and varieties for consumers
Less wages to the workers
5 Best Stocks with Monopoly Businesses to Invest for Long Term in India:
1. PIDILITE Industries
This is one of the best monopoly stock in Adhesive and Chemical sector, has been showing consistent growth since its inception, 1969. It has 9 regional offices and 23 plants in India. It became one of the most trusted brand in India and is expanding its businesses across the Globe. It also been investing in R&D for innovative products to meet the customers' day-to-day changing requirements and due to this, it has entered in new segments in Adhesive and Chemical sector. One more big plus point is, the company doesn't have debts. The operating profit margin is around 23% which is a strong point for long term investment.
Indian Railway Catering and Tourism Corporation (IRCTC) is a fully owned subsidiary of Indian Railways that provides ticketing, catering, and tourism services to the Indian Railways. It was initially wholly owned by the Government of India and operated under the administrative control of the Indian Ministry of Railways, but has been listed on the National Stock Exchange since 2019, with the Government continuing to hold majority ownership. Because of this, IRCTC is one of the best performing monopoly stock in Indian equity market. One can go long with IRCTC as it is one of the best bet on giving good return. Company having a good history and strong management system with a very low market capital and it will give good dividend earning. Current price is around 1400 and in 5 years it will definitely be double, and dividend earnings will be your interest earning from the investment. Every day IRCTC website hits around 3 crore transactions and is the most visited website in India. Due to Covid, there is some business impact for next couple of quarters, but in the long run, it will zoom.
Avanti Feeds Limited was founded in 1993 and is based in Hyderabad, India. Avanti Feeds Limited manufactures, processes, exports, and supplies shrimp feeds in India and to many other countries including USA. The company provides shrimp feeds for aqua culture to grow shrimps; and technical support services for the farmers. This is a monopoly in Shrimp Manufacturer and is Debt Free and way ahead of competition. However, this is a volatile stock and is good for risk appetited investors.
4. InfoEdge India Ltd.
Info Edge (India) Limited is a monopoly in online classifieds business and is currently providing services in the areas of recruitment, matrimony, real estate, and education and related services in India and internationally. Info Edge (India) Limited was incorporated in 1995 and is based in Noida, India. The company's most successful online businesses includes Naukri.com, naukrigulf.com, ambitionbox.com, ambitionbox.com, 99acres.com, Jeevansathi.com, shiksha.com, zomato.com etc. making monopoly in Online businesses. The current pandemic situation is also a plus point to the future growth of the company.
5. Hindustan Aeronautics Limited (HAL):
Hindustan Aeronautics Limited is a monopoly in the design, development, manufacture, repair, overhaul, upgrade, and servicing of aircraft, helicopters, aero-engines, avionics, accessories, and aerospace structures in India and internationally. The company was incorporated in 1940 and is based in Bengaluru, India. The company also provides avionics, such as inertial navigation systems, auto stabilizers, head up displays, laser range systems, flight data recorders, communication equipment, radio navigation equipment, air borne secondary radars, missile inertial navigation systems, radar computers, and ground radars; and system and accessories comprising hydraulic and many more products. HAL is a stable stock, however because of the pandemic situation, there will be some turbulances and will be suppressed over the time.
Points to Remember Before Investing into Monopoly Stocks
Investors with Medium-to-High risk appetite can look into these stocks
Monopoly stocks are suitable for long-term stocks (i.e. 3 yrs to 5 yrs time-frame)
Systematic approach is the best approach for investing. As we cannot time the Market, lumpsum is not suggestible
Any Government policies may affect the stock prices for short-term
Do your own research before investing
This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.