A company’s percentage of share in a particular industry or sector is called market share.
For example, the telecom sector has 4 major players currently:
|2||Vodafone Idea||33 crore||28.95%|
Reliance Jio is the industry leader with more than 32% market share. The company that has the highest market share is called ‘industry leader’.
Vodafone Idea is the second largest player with 29% market share. Airtel is No 3 with 28% market share and the government company BSNL comes last with less than 11% market share.
In the same way, Asian Paints commands nearly 42% market share in the paint business, while No 2 player Berger Paints has market share of less than 13%.
The main objective of most companies is to increase their market share. For the industry leader, increase in market share means the company is able to hold-on to its dominant position. This could mean that the top company commands a premium valuation at the stock market – as compared to its rivals.
When the second or third player increase their market share and grow fast, they could challenge the position of the No 1 player. This could result in valuation re-rating of the stock.
When a company attains 100% market share, it means there are no competitors and the business is a monopoly.