Best Monopoly Stocks in India Based on 5-yr CAGR – July 2024

Monopoly stocks represent companies in the stock market with minimal or no competition, allowing them to dictate prices and enjoy significant control. These companies hold substantial market power, often influencing sector regulations and deterring new entrants due to high barriers or operational costs. These monopolies can be found in both government and private sectors, particularly in natural resources, defence, and strategic industries.

For example, in India, IRCTC (Indian Railway Catering and Tourism Corporation) exemplifies a monopoly in online railway ticketing. On average, about 12.38 lakh tickets were sold per day through IRCTC’s mobile app and website during FY 2023-24. This showcases the company’s dominant market position.

In this article, find some of the best monopoly stocks in India in 2024 sorted based on 5-yr CAGR.

List of the Best Monopoly Stocks in India Based on 5-yr CAGR

Note: The monopoly stocks list provided here is as of July 10, 2024. The stocks are sorted based on 5-year CAGR.

Overview of the 5 Monopoly Stocks in India

1. Hindustan Aeronautics Ltd

Hindustan Aeronautics Ltd (HAL) is India’s state-owned aerospace and defence company. It manufactures combat aircraft, helicopters, aero engines, and other defence equipment for the Indian armed forces and exports its products to various countries.

In the quarter ended March 2024, the company reported a total income of ₹15,32,586 lakh, marking an increase from ₹13,21,654 lakh in the same period of March 2023. For the fiscal year 2024, the total income amounted to ₹32,27,938 lakh, up from ₹28,59,965 lakh in FY 2023, indicating a growth of approximately 12%. In FY 2024, the company’s net profit stood at ₹7,59,504 lakh, rising by approximately 31% from ₹5,81,117 lakh in FY 2023.

Key financial metrics 

• Net Profit Margin: 23.59%
• Return on Capital Employed (ROCE): 28.20%
• Debt to Equity: 0.22%

2. Praj Industries Ltd

Praj Industries Ltd designs, manufactures, and supplies industrial process equipment, bioproducts plants, and environmental technologies. They cater to sectors like alcohol, sugar, pharmaceuticals, chemicals, and biofuels.

The company’s income from operations was ₹10,185.646 million in Q4 FY23, compared to ₹10,039.845 million. For FY 2024, income from operations was ₹34,662.784 million, down from ₹35,280.378 million in FY 2023, reflecting a decrease of approximately 2%. Profit after tax (PAT) for FY 2024 amounted to ₹2,833.909 million, increasing approximately 18% from ₹2,398.182 million in FY 2023.

Key financial metrics 

• Net Profit Margin: 8.04%
• ROCE: 26.98%
• Debt to Equity: 13.29%

3. Indian Energy Exchange Ltd

Indian Energy Exchange Ltd (IEX) is an electronic platform for trading electricity and other related products. They facilitate buying and selling electricity between generators, distributors, and large consumers, ensuring efficient price discovery in the Indian power market.

In Q4 FY24, revenue reached ₹149.5 crore, marking a 15.4% year-on-year increase. For FY 2024, revenue was ₹550.8 crore, showing a 16.2% year-on-year growth. PAT in FY 2024 amounted to ₹341.4 crore, reflecting a 16.7% year-on-year increase.

Key financial metrics 

• Net Profit Margin: 62.45%
• ROCE: 55.64%
• Debt to Equity: 1.76%

4. Coal India Ltd (CIL)

As of April 2-20, CIL is the world’s largest coal producer. The company is owned by the Indian government. They operate through subsidiaries across different states in India, mining and supplying coal for power generation and other industrial uses. As per a report by the PIB (Press Information Bureau) in 2022, CIL contributes to over 80% of India’s total coal production.

Coal India Limited reported a 25.8% rise in consolidated PAT to ₹8,640 crore in Q4 FY 2023-24. For the fiscal year 2023-24, PAT surged to ₹37,369 crore, marking a 17.8% year-on-year increase from ₹31,723 crore in FY 2023.

Key financial metrics 

• Net Profit Margin: 24.82%
• ROCE: 35.16%
• Debt to Equity: 7.47%

5. Indian Railway Catering and Tourism Corporation Ltd (IRCTC)

IRCTC is the sole authorised provider of catering services on trains and railway stations across India. They also handle online railway ticketing, packaged tours, and bottled water services. IRCTC enjoys a monopoly position within the Indian Railways system for these services.

In the quarter ended March 2024, the company reported a total income of ₹1,18,740.75 lakh, marking an increase from ₹1,00,428.31 lakh in the same period of March 2023. For the fiscal year 2024, the total income amounted to ₹4,43,465.62 lakh, up from ₹3,66,190.34 lakh in FY 2023, a growth of ~21.10%. In FY 2024, the company’s PAT stood at ₹1,11,125.79 lakh, rising by ~10.51% from ₹1,00,588.11 lakh in FY 2023.

Key financial metrics 

• Net Profit Margin: 25.05%
• ROCE: 56.15%
• Debt to Equity: 3.40%

Pros and Cons of Investing in Monopoly Stocks

Pros of Investing in Monopoly Stocks

• Stable Profits: Monopoly stocks often enjoy consistent profitability due to their dominant market position, which allows them to control prices and minimise competition.
• High Entry Barriers: Monopolies typically face limited competition due to high entry barriers, such as regulatory approvals, significant capital requirements, or proprietary technologies.

Cons of Investing in Monopoly Stocks

• Regulatory Risk: Governments may impose regulations to curb monopolistic practices, affecting pricing power and profitability.
• Innovation Challenges: Lack of competition may restrain innovation and technological advancement within the company.

Conclusion

Before investing in monopoly stocks, you should carefully weigh the advantages and risk factors along with market conditions and company-specific risks. You should take your investment objective and risk appetite into consideration. Talk to your financial advisor before making a decision.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.