No matter what the market conditions may be, a bull market, a bear market, or even a trendless market, investors are always on the lookout to find profitable stocks at bargain prices.
After all, who doesn’t like bargaining?
tempted to seek Stocks That Triple or Quintuple Are Irresistible,
And generally, the starting point for this is to buy a solid stock for cheap.
But the challenge is how to find these stocks.
can be an approach Focus on Monopoly Shares, Monopolies benefit from higher barriers to entry and better margins.
Acquiring these shares at low valuations can potentially generate consistent wealth over the long term.
With the recent correction in the market, shares of some of these monopoly stocks are trading lower.
Here are 5 monopoly stocks in India that are trading at over 35 per cent discount to their recent highs.
The first monopoly stock in our list is IRCTC.
The stock is currently trading at a discount of 50% from its 52-week high of Rs 1,279.3.
Indian Railway Catering and Tourism Corp (IRCTC) is a government body. It is the only authorized organization by Indian Railways to offer online railway tickets. Effectively, it has a 100% market share in the region.
Apart from this, it also has a monopoly in the packaged drinking water sold on Indian trains.
In the last 5 years, the revenue of IRCTC has grown at a CAGR of 4.3 percent over 5 years. However, the net profit witnessed a CAGR growth of 25.3 per cent.
The company’s numbers have improved as compared to last year. In 2022, the company’s revenue grew by 103 per cent year-on-year to Rs 6.9 billion. And it reported a 106 per cent year-on-year growth in net profit to Rs 2.1 billion.
This growth was driven by increased revenues in the catering and tourism sectors.
IRCTC is planning to build a budget hotel. These will be built in Lucknow, Banaras and Ayodhya.
To know more about the company, check IRCTC factsheet and quarterly results.
#2 Indian Energy Exchange (IEX)
Next on our list is IEX.
The stock is currently trading at a discount of 48 per cent from its 52-week high of Rs 318.6.
IEX is one of the two nodal power exchanges in India. It accounts for 95 percent of short-term electricity contracts traded on exchanges. It is a virtual monopoly.
In the last five years, the revenue has grown at a CAGR of 16.5 per cent. However, the net profit witnessed a CAGR growth of 21.6 per cent.
The increase is due to the steady increase in the amount of electricity on the exchanges.
In 2022, the company saw a 36 per cent increase in revenue to Rs 4.8 billion. However, it registered an increase of 50 per cent year-on-year in net profit to Rs 3 billion.
A 29.2 percent increase in power volume was the main reason for the strong performance.
The company is planning to increase the capacity.
To learn more about the company, check out IEX’s factsheet and quarterly results.
#3 Computer Age Management Services (CAMS)
Third on our list is Computer Age Management Services.
It is currently trading at a discount of 42 per cent from its 52-week high of Rs 4,067.4.
The company provides transaction processing and customer service services. It is also in the business of online transactions and capital accounting. This accounts for 70 percent of the market share on the average mutual fund’s assets under management.
In the last five years, its revenue has grown at a CAGR of 13.7 per cent. Further, net profit witnessed a CAGR growth of 17.6 per cent.
Mutual fund asset service was one of the main drivers of growth. The development was further supported by the trend of digitization.
In 2022, the company saw a 24 per cent growth in revenue to Rs 9.3 billion. It registered a year-on-year growth of 39 per cent in net profit. Higher transaction volumes and new SIP registrations were the drivers of gains.
In 2022, the company launched its first cloud-based platform. It has increased its customer base by fifteen for the year.
To learn more about the company, see CAM’s factsheet and quarterly results.
#4 Multi Commodity Exchange (MCX)
Fourth in the list is the Multi Commodity Exchange.
MCX is currently trading at a low of 40 per cent from its 52-week high of Rs 2135.
It is the largest futures exchange in India. Its market share is more than 95%. It has a monopoly on trading in bullion metals, base metals and crude oil in India.
Due to increase in global stock market volatility, MCX witnessed an increase in trading volume. In the last five years, its revenue has grown at a CAGR of 8.7 per cent. Further, net profit witnessed a CAGR growth of 4.4 per cent.
In 2022, the company saw a 10 per cent increase in revenue to Rs 1.4 billion. It also reported a 21 per cent increase in net profit to Rs 678 million.
The company also plans to develop new products and contracts for 2023.
To know more about the company, check MCX factsheet and quarterly results.
#5 Hindustan Zinc
Last on our list is Hindustan Zinc.
Hindustan Zinc is currently trading at a discount of 34 per cent from its 52-week high of Rs 408.6.
It is an Indian mining and processing producer of zinc, silver and lead. It has a 78 per cent stake in the primary zinc industry. It is the second largest zinc-lead miner in the world.
In five years, its revenue has grown at a CAGR of 11.2 per cent. Further, net profit witnessed a CAGR growth of 2.9 per cent. This was on the back of the company’s metal production capacity.
In 2022, the company saw a 27 per cent increase in revenue to Rs 87 billion. It also reported an 18 per cent increase in net profit to Rs 29 billion.
This was due to the highest ever metal production by the company. Simultaneously, the price of zinc rose by 37 per cent. These two factors drove the company’s earnings.
For 2022, the company is to set up a 30 kilo tonnes per annum (KTPA) plant in Rajasthan. This plant is to expand the production of zinc alloys.
This move is in line with the company’s strategic objective of reducing our dependence on thermal power by increasing our renewable energy.
To know more about the company, check Hindustan Zinc’s factsheet and quarterly results.
How to Invest in Monopoly Shares?
Monopolies are challenging to create and maintain without government support.
Warren Buffett has always emphasized the idea of investing in companies that have a moat.
A moat refers to a deep, wide moat that surrounds a palace, fort or city. It serves as a defense against attack.
In investing, it refers to a company’s ability to maintain its competitive advantage over its peers. The stronger the trade, the bigger the gap. The smaller the gap, the weaker the trade.
The gap between all these monopoly companies is high. This is because they have the majority of the market share. This share helps them to generate revenue in adverse economic conditions.
If you are planning to invest in such stocks, then assess the fundamentals of the company and invest wisely fundamentally strong stock,
Also, take into account the overall factors affecting the company and the industry.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)