My March’19 column written for Safal Niveshak’s ‘Outside the box’ newsletter
One common advice I find veteran investors passing on to next-generation investors is to look for companies dominating their industry and enjoying entry barriers ensuring their profit pool share is protected.
Now, ideally, we may think that the top 3-4 players by market share in any category should be qualified as ‘dominant players’ even if their respective market share is in single digit. However, for the purpose of this research, I have restricted my analysis to only those companies that enjoy at least a 35% share in their respective categories.
You must be thinking that it is quite a stringent filter and there would only be a handful of companies that will make it to the list – after all, we are a free economy with enormous capital chasing opportunities on one side and ever-tightening regulations in the form of competition commission etc., on the other.
But you would be surprised to learn that having spent just a couple of days and recollecting about all the companies I have studied or read about over the last decade, I could actually pin down a list of 60 listed companies that enjoy a market share of 35% or higher.
I am sure I must have missed out on many other listed companies and so the list may get longer and even more if one were to include a few unlisted businesses like NSE, a virtual monopoly, or Amul, which boasts of a 40% share of the cheese and other value-add dairy products market.
You would see the complete list at the end of this article. But before that, let me share the top 10 observations while analyzing this distinct sub-set of dominant businesses –
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