Monopoly stocks is the favourite category of veteran investor Mr. warren buffet. Monopoly is the thing which every single investor wants to see in their portfolio companies. A monopoly means a business that is the market leader in its industry or market. It happens due to a significant competitive advantage or a high entry barrier.
These types of companies are falls in the MOAT. MOAT is like a castle which is surrounded by water full of alligators. Which represents the margin of safety and high entry barrier. Entry barriers like government restrictions, significant capital, competitive edge, low margin product, or customer trust. Let’s take a look at companies which enjoys the monopoly in their segment.
Small Cap: NOCIL
NOCIL is engaged in the manufacturing of rubber chemicals. The company was established in 1961. Rubber chemicals are used in the tyre industries and rubber processing industries. The company handles 40 per cent of the market share.
NOCIL serves the industry with a huge product range. Their rubber chemical portfolio includes antidegradants or antioxidants, accelerators, and non-automobile industries products like F, ZDC, ZDBC, ZMBT, SDBC, ZBZDC, and DHTS. NOCIL also manufactures pre-vulcanisation inhibitors and post-vulcanisation stabilizers.
The company has two manufacturing facilities located in Navi Mumbai and Dahej. The product manufactured by the company is used in the tyre-tube moulded components for vehicles, industrial belts and gloves. The company has long-term relationships with their clients. They supply their products to Apollo, JK, Sumitomo rubber, MRF, CEAT, Yokohama, Continental, and many more.
Mid Cap: CAMS
CAMS is a mutual fund transfer agency. The company provides investment services and distribution services to asset management companies. It is India’s largest RTA technology-driven financial infra provider in the mutual fund services category. CAMS is India’s largest registrar and transfer agent of mutual funds.
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The company has more than 22 trillion INR worth almost 69.4% market share in India. CAMS offers the services like dividend processing, transaction origination interface, payment, transaction, execution, dividend processing, intermediary, and compliance services related to mutual funds.
CAMS launched its IPO in September 2020. At the time of listing the company gives 100 per cent listing gains to its investors. The company in the sunrise industry So, we can expect to do well in the future.
Large Cap: Asian Paints
The company was established in 1942. Asian Paints is the largest paint manufacturer in India. It is also engaged in the business of manufacturing varnishes and surfacing preparation, organic composition solvents, thinners, and accessories that are needed in the construction and decoration of houses and offices.
Asian Paints operates in more than 15 countries and it has 26 paint manufacturing facilities. The group company operates through multi-brand images such as Asian Paints Berger, Apco Coatings, SCIB Paints, Taubmans, Causeway Paints and Kadisco Asia Paints.
Not just parts the company also manufactures sanitary ware such as baths, sinks, washbasins and similar articles in stainless steel segments and ceramic segments. The company enjoys an 83.70 per cent market in the decorative coating industry. It is the 3rd largest paint company in India.
While investing in monopoly stocks you have to first determine whether the company has the capabilities to hold its monopoly in future. You can do that by understanding the company’s margin and entry barrier in that segment. If you have such monopoly companies in your mind do let us know in the comment section. You also can invest in these monopolies just by clicking here.