5 proprietary stocks are trading at a 35% discount from their recent high
Regardless of the state of the market, a bull market, a bear market or even a trendless market, investors are always looking for profitable stocks at bargain prices.
After all, who doesn’t love a bargain?
The lure of finding a stocks that triple or double are irresistible.
And often, the starting point for that is buying a solid stock on the cheap.
But the challenge is how to find these stocks.
One possible approach is focus on proprietary stocks. Monopolies benefit from high barriers to entry and superior profit margins.
Buying these stocks at a lower valuation can create steady wealth over the long term.
With the recent market correction, shares of some of these proprietary stocks are trading lower.
Here are 5 India-exclusive stocks that are trading at a discount of more than 35% from their recent highs.
IRCTC No. 1
The first proprietary stock on our list is IRCTC.
The stock is currently trading at a 50% discount from its 52-week high of Rs 1,279.3.
The Indian Railways Travel and Services Corporation (IRCTC) is a government entity. It is the only organization authorized by Indian Railways to provide online railway tickets. In terms of efficiency, it has a 100% market share in the field.
In addition, it also has a monopoly on packaged drinking water sold on Indian trains.
Over the past 5 years, revenue at IRCTC has grown at a CAGR of 4.3% over 5 years. However, net profit has a compound annual growth rate of 25.3%.
The company’s numbers have improved over the past year. In 2022, the company’s revenue increased 103% year-on-year to Rs 6.9 billion. And it reported a 106% YoY increase in net profit to Rs 2.1 billion.
This growth was driven by increased revenue in the food service and travel segments.
IRCTC is planning to build budget hotels. They will be built in Lucknow, Banaras and Ayodhya.
For more on the company, see IRCTC’s quarterly results and data sheet.
#2 Indian Energy Exchange (IEX)
Next on our list is IEX.
The stock is currently trading at a 48% discount from its 52-week high of Rs 318.6.
IEX is one of two node power exchanges in India. It accounts for 95% of short-term electricity contracts traded through exchanges. It’s a virtual monopoly.
Over the past 5 years, revenue has grown at a CAGR of 16.5%. However, net profit compounded annual growth of 21.6%.
This growth is due to the continuous increase in electricity output on exchanges.
In 2022, the company’s revenue increased 36% year-on-year to Rs 4.8 billion. However, it reported a 50% growth in net profit year-on-year to Rs 3 billion.
The 29.2% increase in power output is the main reason for the strong performance.
The company is planning to expand capacity.
For more on the company, check out IEX’s quarterly results and data sheet.
#3 Computer Age Management Services (CAMS)
Third on our list is Computer Age Management Services.
It is currently trading at a 42% discount from its 52-week high of Rs 4,067.4.
The company provides transaction processing and customer care services. It is also in the business of online transactions and capital accounting. It has a 70% market share in terms of average mutual fund assets under management.
Over the past 5 years, the company’s revenue has grown at a CAGR of 13.7%. In addition, net profit has a CAGR of 17.6%.
Mutual fund asset offerings have been one of the key drivers of growth. The growth is further supported by the trend of digitization.
In 2022, the company’s revenue increased 24% year-on-year to Rs 9.3 billion. It also reported a 39% growth in net profit year-on-year. High trading volume and new SIP subscriptions are the driving force behind the profits.
In 2022, the company launches its first cloud-based platform. It has grown its customer base by fifteen in the year.
For more on the company, check out CAM’s fact sheet and quarterly results.
#4 Multi-Commodity Exchange (MCX)
Fourth on the list is the Multi-Commodity Exchange.
MCX is currently trading at a low of 40% from a 52-week high of Rs 2,135.
It is the largest futures exchange in India. It has a market share of more than 95%. It has a near monopoly on gold, base metals and crude oil trading in India.
Due to the increase in global stock market volatility, MCX has seen an increase in trading volume. Over the past 5 years, the company’s revenue has grown at a CAGR of 8.7%. In addition, net profit has a compound annual growth rate of 4.4%.
In 2022, the company’s revenue increased by 10% year-on-year to Rs 1.4 billion. It also reported net profit growth of 21% year-on-year to Rs 678 million.
The company also plans to develop new products and contracts for 2023.
For more on the company, check out MCX’s quarterly results and data sheet.
# 5 Zinc Hindustan
Last on our list is Zinc Hindustan.
Zinc Hindustan is currently trading at a 34% discount from a 52-week high of Rs 408.6.
It is an Indian zinc, silver and lead mining and production company. It holds 78% market share in primary zinc industry. It is the world’s second largest lead-zinc mining company.
Over 5 years, the company’s revenue has grown at a CAGR of 11.2%. In addition, net profit has a CAGR of 2.9%. That’s thanks to the company’s metal production prowess.
In 2022, the company’s revenue increased 27% year-on-year to Rs 87 billion. It also reported an 18% increase in net profit year-on-year to Rs 29 billion.
That’s due to the company’s highest-ever metal output. In addition, the price of zinc also increased by 37%. These two factors have enhanced the company’s earnings.
In 2022, the company will set up a 30 kg ton per year (KTPA) plant in Rajasthan. This plant aims to expand zinc alloy production.
This move aligns with the company’s strategic intent to reduce reliance on thermal power by scaling up our renewable energy.
To learn more about the company, see Hindustan zinc quarterly results and data sheet.
How to invest in proprietary stocks?
Monopolies are challenging to create and maintain without government support.
Warren Buffett has always emphasized the idea of investing in companies with moats.
A moat refers to a deep, wide ditch that surrounds a castle, fortress, or town. It serves as a defense against attack.
In investing, it refers to a company’s ability to maintain a competitive advantage over its peers. The stronger the business, the bigger the moat. The lower the moat, the weaker the business.
All these monopolies have higher moats. That’s because they have the majority of the market share. This stake helps them generate revenue during adverse economic conditions.
If you plan to invest in such stocks, evaluate the company’s fundamentals and allocate wisely. fundamentally strong stock.
Also, keep in mind the overall factors that impact the company and the industry.
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
This article is provided by Equitymaster.com
(This story has not been edited by NDTV staff and was automatically generated from the syndication feed.)
