What are monopoly stocks, and which are the five best monopoly stocks in India? Or

Top 5 monopoly stocks in India

the five best monopoly stocks

A monopoly stock is an asset that works with little or no competition from the same sector. Thus, with little competition, monopoly stocks can tweak the conditions and change the pricing of the products in their favour. This power to control the conditions and prices allows monopoly stocks to succeed in the market. Thus, they are leaders in their particular sector due to this major competitive advantage. They maintain the highest market share for their products as it is really tough for companies that offer similar products and services to compete with them.

Monopoly stocks are also popularly called Moat stocks. A moat was a hole-like feature that was present in castles from medieval times, built as a defence against attackers. Moats, in the business world, are various factors that make it really difficult for other companies to compete with them. Moats constitute factors like huge capital, a specific business advantage, or government restrictions that make it tough to compete with monopoly stocks. 

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Best monopoly stocks to invest in 2022 

Let’s look at some of the best monopoly stocks in India:

1. IRCTC - The Indian Railway Catering and Tourism Corporation (IRCTC) is a central public center enterprise established on 27th September 1999. It was established under the Ministry of Railways of the Government of India as an extension of the Indian Railways. It has monopoly stocks as it is the only player working in this sector in India, and people have no other option or alternative. However, the government announced earlier this year that it would soon allow private players to work in this sector. Over the last five years, IRCTC revenues have grown at a CAGR of 4.3%. For the year ending in March 2022, IRCTC had declared an equity dividend payout of 175.00%, which amounts to Rs. 3.50 each share. So far, no bonus shares have been issued. The current share costing Rs. 703.00 would lead to a dividend yield of 0.5%.

2. Hindustan Aeronautics Limited (HAL) - In simple words, HAL represents the aviation sector in India and plays a very important role in this field. The company was set up for the sole work of manufacturing aircraft in the country. HAL now designs, assembles, and puts together all aircraft, jet engines, helicopters, and their spare parts in India. The HAL has not issued any bonus shares since 2000. The long-term performance of HAL has been impressive, with a dividend yield that amounted to Rs. 15.00 per share in 2021.

3. Nestle (Cerelac) - Nestle introduced Cerelac as an instant cereal for infants who are at least six months old. It works as a supplement for breast milk. Nestle is one of the leading brands in the world in sectors like nutrition and food and having spent more than 100 years in the Indian market, and it has gained the trust of almost all the people living here. Thus, it has monopolized the market even though the sector is open to other layers as well. 

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4. Coal India - Coal India Limited is a coal mining as well as a coal refining company. Owned by the Union Government in India, it is the largest coal-producing company in the whole world. It accounts for up to 82% of the net coal production in the country. However, the government has declared that the coal mining sector would soon be open to commercial players, and thus, the monopoly might end in the near future. Also, the current share price of Rs. 231.05 would yield a dividend of 7.36%. Any bonus shares have not been issued since January 2000.

5. Hindustan zinc - Hindustan zinc is the second-largest zinc0lead miner in the world, with a 78% market share of the zinc industry in India. It was incorporated in 1966 under PSU or a Public Sector Undertaking as Metal Corporation of India. Just one bonus share was issued in March 2011 in the ratio of 1:1. The long-term performance of Hindustan Zinc Ltd. has been quite good, and dividends have been constantly declared for the last five years. It witnessed a 27% YoY increase in revenue in 2022.

Related: Top Indian monopoly stocks of 2021

 TOP MONOPOLY Stocks in India 2022

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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