Monopoly Multibagger Stocks in India:
Firstly answer my question if I ask you about hair oil, The only brand we remember is parachute. if you think about infant food the brand only we can look into is Cerelac. Not only these two brands there are many brands like Fevistick, Fevicol and many more established their strong presence and market share and they have lot of potential to grow in our emerging economy. These companies are enjoying major market share in their particular segment. These stocks can be referred as monopoly multibagger stocks.
Let’s analyse these monopoly multibagger stocks and their positives and negatives, growth prospect, scope for the industry growth, advantages compare to the other companies, financials and important support levels where we can accumulate more stocks in these companies.
Top 10 Monopoly Multibagger Stocks:
1. Pidilite Industries
May be some don’t know this company by the name but everyone knows the great products of Pidilite they are Fevicol, Fevikwik and Fevistick.
This company is the market leader in adhesives industry. This company was incorporated in 1959. They started with Fevicol and till now continuously growing and Estd themselves as a market leader by launching several products and developing competitive and innovative advanced technology.
Positives :
- Quality products and innovative marketing strategy
- Constantly penetrating into different market segments
- They have built strong mindset in the people about their products
- Acquired blue coat and araldite companies as they started gaining market Share.
Financials :
The company One lakh crore market cap and from last three years stock has grown with 22% CAGR, sales growth 9% and shown profit growth 10%, net profit margin from last three years is growing with 14.3%, ROE is 24.76% ROCE is 32.02% and most important debt to equity is 0.03 so that we can understand Pidilite industries is almost debt free and has strong financials.
If you look at shareholding pattern promoters having 70.19%, FIIs are holding 11.39%, DIIs holding 8.24% and public having 10.18%.
Conclusion :
As we are looking for buildings long term portfolio we can add the stock for every 10 to 15% fall so that we will get a better average by price. Here we are ignoring PE multiple.
2. Asian Paints
Asian paints Is the leader in Indian paint industry. There are holding leading position from last 50 years it’s not a small thing in the market but they have proved it. This company is Asia’s third largest in the world’s Ninth largest paint company. They have interior, Exterior, metal and wood finishing Paints in their product Range.
They have 60% market share in decorative paints segment. Rest of the companies sharing 40% share. Not only India but also they’re selling their products in 60+ countries so that we can understand they have great presence in the paint industry across the world. They have 200+ scientists in their R&D and 70,000+ dealers in India. This is one of the monopoly multibagger stocks in India.
Positives :
Major positives are strong product range and market presence. Delivering quality products as per customer preference by using their technology and innovations constantly. Strong dealer network again a positive.
And most importantly the big positive his people are thinking about their homes to make them unique and building their homes as per their taste.
Now the people are very specific about colours in, interior and Design. The data showing that people are moving to the branded paint side.
Financials :
The company’s market cap is 2,50,000 crores Start growing with 31% CAGR from last three years, Sales are growing with10% CAGR, Profit is growing with 12% CAGR, Net profit margin is 12.19%, ROE is 24.57% , ROCE is 31. 54%and company is almost Debt free. Generating positive cash flows.
If you look at shareholding pattern promoters holding 52.79% FIIs holding 21.13% DIs having 7.02% government holding 0.08% and public is having 18.98%.
3. Marico Limited
Parachute, the well known and popular hair oil brand which is holding 59% of the market share in hair oil category, which is fully owned by the company Marino Ltd.
Parachute is the very important brand for the company and Saffola is the next important brand for the company, It has strong presence in premium cooking oil and healthy food segments.
Marico’s Saffola edible oil captured 77% of market share in premium cooking oil segment and Saffola oats having 34% market share Oats segment.
Along with these company has started penetrating into Men’s grooming, Hygiene and Ayurvedic product segments. Also company announced to launch Voodles like Maggie and Yippie Noodles and announced Soya Chunks.
Financials :
The company generating 44% of revenues from Parachute brand, 24% from Value added hair oils, 23% from Saffola brand, 5% from Premium Personal care and 4% from others. Generating positive cash flows.
If you look into share holding pattern, Promoters holding 59.61%, FIIs – 24.16%, DIIs – 9.99% and Public holding – 6.21%.
Market cap – ₹53000 Cr
Stock Price grown with 9% CAGR from last 3 years
Sales Growth – 7% CAGR
Profit – 11% CAGR, Net profit margin – 14.1%R OE – 34.41% ROCE – 44.79%, Debt to equity – 0.12 (almost debt free)
Above 3 stocks are fundamentally and technically very strong and their vision about future is clear.
These companies are market leaders in their industries and they have strong growth possibilities as Indian economy is yet to grow more. So as part of building long term portfolio we can add them in every 10-15% fall.
4. Nestle India
Nestle India, just forget about the company just I will share few brands of this company so that you will come to know how strongly company established its brands in the market. The brands are Cerelac, Maggi, KitKat, Nescafe, and many more. So what do you think about this company? is this a potential company.
Absolutely it’s a monopoly and has a strong growth prospect because the most brands of Nestlé India are leading with a No. 1 position in their product segments. You can see the below image for your reference.
Financials:
Company’s market cap is 1,70,000 crores, stock price is growing from last three years with 26% CAGR, sales grown with a 10% CAGR, profits grown with 19% CAGR, net profit margin is 14.13%, ROE is 60% And ROCE is 43.5%. The company is almost dead free and continuously generating positive cash flows from its operations.
If you look into shareholding pattern promoters are holding 62.76%, FIIs are holding 12.84%, DIIs are holding 7.75% andpublic holding 16.65%. Company is trading at little expensive P/E ratio but as we are looking for long-term and we can add it for every 10 to 15% fall till 15000.
5. Hindustan Unilever Ltd
Hindustan Unilever Ltd, One of the most trusted brands of India. Apart from the company name if we look at the products we can’t imagine how this company has already become as part of our daily life.
Without using this company products our daily life will never complete, you can understand by seeing the product range of this company why I am saying these words. Then coming to stock after seeing the product range by name will come to know the exact potentiality of the stock.
The famous brands of HUL are Lux, Dove, Hamam, Lifebuoy, Pears, Vim, Surf excel, Rin, Comfort, Sunsilk, Lakmé, Tresemme, Brooke Bond, Lipton, Tajmahal, Domex, Kissan and many more. Almost these all brands are in number one position in their segments, and also the acquired the famous brand Horlicks and one of growing hair care brand Indulekha. These all are Big positives for the company and I can say that this company will survive till man is alive.
Financials :
HUL is almost holding number one position by holding. 54% market share, 55% market share in dishwasher detergent segment, 47% of market share in hair care and shampoo related segment and 37% of market share in personal care segment. If you look at revenue break up their earning 45% of their revenues from beauty and personal care, 34% from home care, 19% from food and refreshment and 4% from others.
This company’s market cap is at almost 6 Lakh Crore, Stock price grown from last three years with 20% CAGR, Sales grown with 8% CAGR and profit is growing with 17% CAGR. Margins are maintaining at 15.68%, ROI is at 76.86% and ROCE is at 89.09%. This company is almost debt free and if you look at shareholding better promoters are holding 61.9%, FIIS or holding 14.92%, DIIS and holding 10.72% and public is holding 12.46%. And companies generating positive cash plus from its operations.
6. IEX
I will try to explain this company business in simple words, This company provides a trading platform as like as commodity exchange for short term Electricity needs.
If any manufacturing company needs extra power more than their long term contract, They will simply place order in IEX then the power producers will try to fulfill their orders where IEX will match the buyer and seller prices and fulfills the order.
Positives : As companies short term needs are growing this companies profitability will increase. This industry is growing rapidly and company is holding 97% of marker share in their industry. It’s a super monopoly business.
Risks : Currently IEX trading platform collecting orders from buyers and sellers also matching their orders. So huge demand is building towards IEX as buyers and sellers are in same place. It will be helpful faster processing. But now CERC – Central Electricity Regulatory Commission trying to develop their own matching system. It effects the company negatively. And they can’t grow by hiking the prices because the prices are under surveillance of CERC. So they just need to improve their volumes.
Financials :
The company‘s market cap is 10,500 crores, stock price is grown with 28% CAGR, sales grown at 9% CAGR and debt projects grown with a 19% CAGR from last three years. They are maintaining net profit margin at 63.48%, ROE at 45.43% and ROCE at 1.87%. And this company is also debt free and generating positive cash flows from their operations. If you look at shareholding pattern FIIS or holding 29.62%, DIIS or holding 36.62% and public holding 33.39%. Here we need to observe that FIIs are continuously increasing their stake from 7% to 29%.
Top 10 Monopoly Multibagger Stocks:
7. CDSL
In 1996 SEBI taken a decision to dematerialise all share certificates into digital format. Initially this responsibility headed by NSDL. Later in 1990 9CDSL was incorporated and started same business which is dematerialised in the share certificates,
This company initially backed by BSE then time to time BSE sold its shares to the leading banks like HDFC Bank, Standard Chartered and Canara Bank. Afterwards CDSL outperformed NSDL and taken leading market share in providing depository services. This company is one of the monopoly multibagger stocks in India.
Positives :
As retail investors increasing time to time in the market and some what financial knowledge improving will be considered as big positives Because these scenarios brings more demat accounts.
The corporate actions like issuing bonus shares, splitting the shares and dividend announcement and number of IPOs coming into the market will also be considered as positives for the stock. Almost there is no chances to any company to enter into this business segment it is also to be considered as a big positive.
Financials :
If you look at the revenue break up they are earning 34% of the revenues by collecting annual issuer charges, 19% of the revenue from transaction charges, 10% of the revenues from IPO and car protection charges, 16% of the revenue from online data charges, 4% of the revenues from ECAS charges and 11% of the revenues from others.
This company’s market cap is around 10,000 crores. The stock price grown with 34% CAGR, Sales grow at 16% CAGR, profit growth at 7% CAGR, net profit margin is at 53.33%, ROE is at 16.29% and ROCE is 20.59%.
This is also a debt free company and generating positive cash flows from their operations. If you look at shareholding pattern promoters are holding 20%, mutual funds or holding 8.09%, DIIs are holding 21.04%, FIIs are holding 13.30% and Public is holding 7.56%.
8. CAMS
CAMS was incorporated in 1988. Will try to understand the business in simple words, this company is a mediator between the investors in mutual funds like you and me and then mutual fund companies. It manages all the details related to investors like units, SIP date, portfolio, redemption and etc.
Company collect the charges from mutual fund companies for servicing their customers based on AUM of the mutual fund company. In this segment company is holding 80% of the market share. This company is one of the monopoly multibagger stocks in India.
Positives :
As financial knowledge increasing in the public and investments gradually increasing into mutual funds will be considered as major positives for the company. Increasing investments into mutual funds are also positive for mutual fund houses it is again a positive for this company.
Financials :
This company market cap is around 10,000 crore, their sales grown with 13% CAGR, profits grown with 14% CAGR and their net profit margin is maintaining at 14.66%, RO it is 20.37% and ROCE is 25.74%.
This company also a debt free company and generating positive cashflows. If you look at shareholding pattern promoters are holding 30.98%, DIS are holding 32.17%, FIIS are holding 8.67% and public is holding 28.17%.
9. IRCTC
There is no need to introduce this company as it is a monopoly business from Indian Railways. If you look at the revenue break up they are earning 45.89% from catering food in trains, 27.24% by selling tickets online, 12.96% from planning state Teerthas and 9.76% from selling RailNeer branded water bottles. They also entered into Bus and Hotel Booking.
Financials :
Companies market cap is 27000 crores. Sales grown with 14% CAGR, profit grown with 32% CAGR, net profit margin is 18.23%, ROE is 30.61% and ROCE is 43.48%.
IRCTC is also a debt free company and generating positive cash flows then if you look at shareholding pattern promoters are holding 67.4%, public is holding 12.46%, FIiS are holding 8.1% and DIIS are holding 10.34%.
10. APL Apollo Tubes
APL Apollo Tubes, A company which manufactures structural steel tubes those can be used in major constructions.
This company is a market leader in this segment and they have a strong establishment and generating huge volumes continuously as their margins are very low. You can observe it in financials. This company don’t have a competition till now until unless Tata steel and JSW steel enters into this business.
Financials :
Company’s market cap is 18,000 crores. Stock price grown with 41% CAGR, sales grown with 25% CAGR, profits are grown with a 16% CAGR and their net profit margin is 2.71%, ROE is 17%, ROCE is 24.83%.
If you look at shareholding pattern promoters are holding 39.47%, public is holding 32.9%, FIIS are holding 17.81% and DIS are holding 11.80%.
Above 10 companies are monopoly based on their several parameters including growth prospective, market share, financials and sustainability of the stocks. If you bought anything keenly observe their quarterly results and structural changes in the company and Industry. You can accumulate every stock in 10 – 20% fall as per your risk appetite.
Disclaimer : Before doing any investment do your own research else take a suggestion from your financial advisor.
To learn how we pick up the stocks, just follow our Fundamental Analysis series to learn
Note: try to analyse above companies especially IEX before investing because if you clearly understand the business then you will get some conviction about the stock, so that short-term falls will never make you fear.