RESEARCH REPORT ON MONOPOLY STOCKS
Indian Railway Catering & Tourism Corporation Ltd
Indian Railway Catering and Tourism Corporation Ltd. is a Mini Ratna of India. It offers services like ticketing, selling of packaged water bottles and catering to the Indian Railways. IRCTC is the only company in this segment and hence it is a true monopoly in the railway sector. In the last quarter, the company had a total sale of Rs. 540 crores. Here is the revenue breakup of IRCTC –
• 57% revenue was generated from the internet ticketing segment.
• 19% from the catering business
• 10% from tourism
• 9.25% from the Rail Neer (packaged water bottle segment)
• 5% from other businesses
The stock is currently trading at a PE multiple of 111. It has also offered an absolute return of 119.25% in the last year (as on March 28, 2022). Promotors have a solid stake of 67.40% and the general public holds a 20.96% stake.
Buy IRCTC at 710, Target 800,840, Stop loss 630
Hindustan Aeronautics Ltd. (HAL)
Hindustan Aeronautics Ltd. is another leading monopoly stock in India from the Indian defence sector. The company was set up in Mysore in 1940 by Mr. Walchand Hirachand. Currently, it is a state owned business. It designs and manufactures fighter jets, helicopters, jet engines, marine gas turbine engines, and a lot more for the Indian military.
The sales of the company grew by 6.11% in the last year as on March 2021 as compared to the previous year, March 2020. In the last year, the stock offered a return of 42% Compounded Annual Growth Rate (CAGR). In the last three years, the stock has offered a CAGR return of 26% (as on March 28, 2022).
HAL is almost debt-free and it is maintaining a healthy dividend pay-out of 31%. The promoters hold a stake of 75.15% and the public hold a stake of 3.45%.
Buy HAL at 2230 or hold, Target 2750, Stop loss 1975
Indian Energy Exchange (IEX)
The Indian Energy Exchange (IEX) is the country’s first and largest electricity exchange. It’s an online marketplace where traders can trade in energy. Not just this, but you can also trade in the electricity market, green energy and renewable energy certificates.
IEX is a monopoly stock because it has the maximum number of transactions for trading electricity. Moreover, the company is continuously innovating according to the latest digital trends. It is also trying to automate the entire market operation by using Robotic Process Automation to improve forecasting models and reduce the time taken to execute each transaction.
The company has almost 95% monopoly in the energy exchange space. That is because 95% of energy exchange happens on IEX. And because there are multiple buyers and sellers quoting different prices, it increases liquidity and you can buy energy at a competitive rate.
IEX has over 4,800 registered participants to trade electricity contracts and 4,400 registered participants to trade in renewable energy contracts.
In the last year, the stock offered a CAGR return of 104%. The promoter holdings of the company is zero but, the Foreign Institutional Investors (FIIs) hold a 31.01% stake. DIIs hold a 17.66% stake and the public holding is 51.02%.
Buy IEX at 160, Target 195,220, stop loss 130
Multi Commodity Exchange (MCX)
Multi commodity exchange or MCX is India’s first commodities derivatives exchange. In this exchange, you can trade in a wide variety of commodity derivatives. MCX has a market share of around 92% in India’s commodity exchange sector. It has a 100% monopoly in the trading of precious metals, energy & base metals.
The distant competitor of the company is National Commodity and Derivatives Exchange Limited (NCDEX) with a market share of around 7%.
In the last quarter, the company had recorded a total sale of Rs. 90 crores. Let’s take a look at the revenue breakup of the company.
3% revenue is generated from trading of silver contracts
27.3% revenue is generated from trading of gold contracts
13.2% revenue is generated from trading of natural gas
8.5% revenue is generated from crude oil
7.2% revenue is generated from trading of nickel contracts.
7% from trading copper contracts
3.2% from trading zinc contract
Buy MCX at 1270-75, Target 1350, 1430, Stop loss 1205
Coal India is a leading coal mining and refining company in India. It was incorporated in 1973 as Coal Mines Authority Ltd. Today it is owned by the Union Government and is managed by the ministry of coal. It also has the title of the world’s largest coal-producing company. The company has a market share of 82% in the coal production industry. The major consumers of the company are power and steel sector companies.
Now, India is the second largest producer of coal in the world. In 2020, it produced about 729 million tonnes of coal. Moreover, the power and steel manufacturing companies use around 57% coal for commercial energy consumption. Coal India is a government-managed company. Most of the coal requirements of the government are fulfilled by Coal India. This makes it a leading monopoly company in the coal production segment.
The company fulfils around 83% of the coal requirements of the company. The company is also diversifying its business by setting up solar power projects and fertilizers plants but still Coal India remains a monopoly company in the coal production segment.
If we look at the financials of Coal India, then the company is almost debt-free and it maintains a healthy dividend pay-out of 56.04%. In the last year, the stock has given a return of 40% CAGR as on March 30 2022. Promoters have a stake of 66.13% and the general public hold a stake of 5.93%.
Buy coal India at 230, Target 245, 270, stop loss 215