Monopoly companies is those which have no or less market competition due to a single-player presence. Monopolistic businesses gain from economies of scale, resulting in reduced average costs such companies usually control the market and are solo or large players in the market.
Here is a monopoly stock with more than 85% market dominance.
India’s pioneer and market leader in vehicle braking systems ZF Commercial Vehicle Control Systems India Ltd(WABCO India) is engaged in the manufacture of air brake actuation systems for commercial vehicles.
The company is one of the leading providers of electronic braking, stability, suspension, and transmission control systems to the global commercial vehicle industry. The company caters to international markets such as South Asia, North America, and the Middle East.
It is a Mid-cap company with a market capitalization of Rs 22,663 crore. The company’s shares were trading at Rs 11,948.80 apiece on June 21. In May 2020, ZF Friedrichshafen AG Company, a German technology company, acquired WABCO.
Now WABCO India accounts for 85% of medium and heavy truck braking solutions in India and the company also supplies compressors for EV buses.
The company has planned to invest about Rs 250 crore as capex for FY23 and FY24. The investment will go towards the capitalization of its new Oragadam facility in Tamil Nadu to ramp up its electric vehicle parts portfolio.
The company boosted e-compressors and Electronic Braking Systems by 28.5% in FY 22-23 compared to FY 21-22, an interesting result against a backdrop of 8% growth.
In Early 2023, The company started manufacturing of Gen 2.0 electric compressors for significant OEM customers and has received orders for electronic braking systems.
In addition, the company opened around 125 augmented windshield display (WSD) branches across the country. Exports increased 19.5% quarter over quarter and 16.5% year over year.
The stock has increased by 33.49 percent year to date, whereas it gained by 66.40 percent in the previous year from Rs 7,141.05 to present levels.
As per financials, Operating sales rose by 35 percent from Rs 2,543 crore in FY 21–22 to Rs 3,444 crore in FY 22–23, Net profit grew by 123 percent from Rs 142 crore to Rs 317 crore within the same time period.
The profitability ratios increased for FY23 were 13.18 percent ROE and 17.39 percent ROCE. The operating margin increased to 12.55 percent, while the net profit margin was at 9.22 percent.
As per the latest shareholding pattern, the company’s promoters own 75% of the stock, while domestic institutional investors (DIIs) own 16.5%.
Written by Omkar C
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