Monopoly stocks characterised by their dominant market positions and pricing power, have long been considered reliable investments. However, the landscape is shifting as various factors threaten the stability of these monopolies. Economic downturns, regulatory scrutiny, and the rise of disruptive technologies are increasingly challenging their market dominance.
Here are two such companies which are losing their monopoly status:
Indian Energy Exchange Ltd
With a market capitalization of Rs.16,229 crore, the share price of Indian Energy Exchange Ltd (IEX) reached a high of Rs.180.95 per share on Wednesday, rising 0.6 percent from its previous close. Over the past one month, the stock has fallen over 24 percent.
Investor concerns about IEX losing its monopoly have grown with the imminent implementation of market coupling, as announced by Power Minister RK Singh. Market coupling, which sets a uniform price across all exchanges, could disrupt IEX’s dominant position.
The potential loss of its price discovery role adds further pressure on the stock. However, IEX’s management remains optimistic, believing the process will be gradual and expects to maintain an 84 percent market share in FY25.
In its latest financial update, IEX reported net sales of Rs.124 crore for Q1 FY25, marking a 20 percent year-over-year growth. Net profit for the quarter reached Rs.93 crore, up 25.6 percent over the same period.
C.E. Info Systems Ltd
With a market capitalization of Rs.11,142 crore, the share price of C.E. Info Systems Ltd reached a high of Rs.2,054.35 per share on Wednesday, up 1.5 percent from its previous close. Over the past five days, the stock has fallen over 6 percent.
According to a news article by CNBC-TV18, Google plans to reduce the cost of the Google Maps Platform by up to 70 percent for Indian developers, could threaten the market share of CE Info Systems (MapmyIndia), a major player in the Indian mapping and location-based services space.
Google’s new, lower pricing for its Maps Platform, tailored to individual countries, could make it more attractive to Indian developers and businesses. This could lead to increased adoption of Google’s services, threatening CE Info Systems’ competitive edge.
With Google’s global reach and data accuracy, cost-conscious developers and companies may shift to Google Maps, increasing competition and potentially reducing CE Info Systems’ market share.
In its latest financial update, C.E. Info Systems reported net sales of Rs.101 crore for Q1 FY25, marking a 14 percent year-over-year growth. Net profit for the quarter reached Rs.36 crore, up 13 percent over the same period.
Power Grid Corporation of India Ltd
With a market capitalization of Rs.3.01 lakh crore, the share price of Power Grid Corporation of India Ltd reached a high of Rs.320.95 per share on Wednesday, falling 0.6 percent from its previous close. Over the past one month, the stock has fallen over 5 percent.
Power Grid Corporation of India (PGCIL) is on the brink of losing its monopoly in the power transmission sector due to growing competition from both state-owned enterprises like NTPC and private players such as Reliance, who are seeking licences to enter the market.
Government efforts to encourage competition and regulatory changes allowing new central transmission utilities could further reduce PGCIL’s 50 percent market share. Financial pressures, including a debt load of Rs.1.6 trillion, are also impacting its ability to invest in new projects.
As private entrants focus on innovation and cost efficiency, PGCIL’s monopoly is expected to diminish, leading to a more competitive sector that could benefit consumers through better services and pricing.
In its latest financial update, PGCIL reported net sales of Rs.11,006 crore for Q1 FY25, reflecting a slight 0.4 percent decrease year-over-year. Despite this, the company’s net profit for the quarter rose by 4 percent, reaching Rs.3,724 crore.
Written by – Siddesh S Raskar
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