Stock Investing for Individuals

Market Size
It is important to understand how large the market that the company is catering to.

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8,000 crores with coconut oil having about 46% of it. At the same time, the size of the paint industry
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2022. As a result, car companies will be much bigger than paint companies which will be bigger than
hair oil companies in size. This is what market size does. It explains how big a company can become.

Paints Industry
If we take the paints industry, where
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Share
Asian paints, for the company to grow
the market has to grow. This puts
restrictions on the company’s growth. No
company can become bigger than the
industry.

For large companies, they can grow in two ways-

1. Either the industry as a whole grows.

2. They enter new industries and new
markets.
Bigger the market size, bigger the company can become before it is forced to try new
things.

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 Market Stability
Stock Investing for Individuals

The main question we ask here is

Who was the biggest company in this space 5 years/10 years back
and where are they now?

For Example:

Marico and Dabur have

been the market leaders
in the hair oil industry
for the past 15 years. So,
we can say that the hair
oil market is quite stable
as it is likely that market
leaders will maintain their
positions in the future.

Whereas:
Micromax, Motorola, and Nokia were market leaders in the mobile industry 10
years back. Then came a wave of Chinese companies like Oppo, Vivo, Redmi,
etc which gained the majority of the market. As a result we can say that the
mobile phone market is relatively unstable as compared to hair oil as leaders
keep on changing.

Here we cannot say that the leaders today will surely be leaders 10-15 years down the
line so this is a classic example of an unstable market from which we will prefer to
stay away as retail investors.
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