Elcid Investments Becomes India’s Most Expensive Stock, Rising from ₹3.53 to ₹2.73 Lakh
When it comes to the Indian stock market, most investors are aware with companies like MRF Ltd., which has historically been the most costly actively traded company. Elcid Investments Ltd., a lesser-known business, has stealthily taken the crown as India’s most expensive stock Elcid Investments Share, with per-share prices topping ₹10-12 lakh in the unlisted market.
Elcid Investments earned news by becoming India’s most expensive stock, jumping 21% in three trading sessions. On Dalal Street, this smallcap stock skyrocketed from ₹3.53 to ₹2,36,250 in a single day, representing an almost 67,000% rise. The stock’s market value is ₹5,470 crore.
Elcid beat MRF Ltd. to become the most expensive stock on October 29, following an auction staged by the Bombay Stock Exchange (BSE) to determine the true value of holding companies. On Monday, the market experienced a significant reversal, with MRF trading 1% lower at ₹1.22 lakh, while Elcid’s shares surged. On November 4, Elcid Investments’ shares reached a high of ₹2.73 lakh, representing a 5% increase.
How did Elcid Investments go from ₹3.53 to ₹2,36,250?
Elcid’s stock price increased as a result of a special auction held by the Bombay Stock Exchange (BSE) to assess the genuine value of investment holding companies, rather than any particular event. Historically, the stock traded between and ₹15. Elcid Investments has a high book value of ₹5.84 lakh, according to Screener.
On October 29, exchanges launched a price discovery procedure for selected investment holding firms utilizing a special call auction method to bridge the gap between their current market value and book value.
In June 2024, SEBI issued a circular proposing a new way to improve price discovery for Investment Companies (ICs) and Investment Holding Companies (IHCs). SEBI discovered that several of these companies were trading much below their book value. To promote liquidity, assure fair price discovery, and increase investor interest in certain stocks, SEBI implemented a framework for a “special call auction without price bands” for these businesses.
Why Elcid Investment shares zoomed in one day?
The investment company’s shares surged 6.7 million percent to Rs 2,36,250 per, surpassing MRF as India’s highest-priced stock in absolute terms. This came after a special call auction “with no price bands” was held for the stock, which last traded at Rs 3.5 per share and had a book value of more than Rs 4 lakh each.
Why have the shares remained at such a low price all along?
Elcid Investment’s primary source of revenue is the interest and dividends earned on its large investment portfolio, which qualifies it as a holding company. Shares of holding corporations typically trade at significant discounts to fair value, and Elcid was no exception until recently. Historically, it has traded at a nearly 100% discount to its book value.
“This deep undervaluation discouraged shareholders from selling at such levels, resulting in limited market liquidity and a persistent gap between the share price and its fair value,” explained Raj Gaikar, Research Analyst at SAMCO Securities. There was also a price-band restriction of 5% every day, which would have limited share price fluctuation.
Concerns about performance-related declines have not affected Elcid because it is a holding company with few commercial operations, so a decline in sales or market share does not exist in this scenario, Gaikar stated.
What caused the exchanges to schedule a special call on Tuesday?
A SEBI circular from 2024 proposed a new mechanism to promote price discovery for investment companies (ICs) and investment holding companies (IHCs). ICs generally invest in stocks, mutual funds, and debentures, whereas IHCs concentrate their assets in group firms. Both ICs and IHCs have no other active lines of business. Their principal assets are investments, which also provide them with income.
“SEBI noticed that many ICs and IHCs are trading significantly below their book value. To help improve liquidity, fair price discovery, and overall investor interest in the stocks of such companies, SEBI introduced a framework for “special call auction with no price bands” for these stocks,” said a note by Zerodha.
Elcid share price stayed steady on Wednesday. Will they move further?
Even at ₹2.36 lakh per share, Elcid trades at a price-to-book multiple of only 0.38. While other holding corporations often trade at a discount to their book values, they have been significantly less undervalued due to increased liquidity. The promoters of Asian Paints hold a 75 per cent stake in Elcid, while other major shareholders include Hydra Trading (9.04 per cent) and 3A Capital Services (3.34 per cent), data for the quarter ended September showed. “Elcid Investments has limited free float, which makes true price discovery challenging. Until more liquidity flows into the stock, the scope for accurate price discovery remains limited. Enough trading volume will be key for its true price discovery,” said Gaikar.
Was there a special auction for other holdcos as well?
A special auction was arranged for various holding companies, including Pilani Investments, Kalyani Investments, TVS Holdings, and Maharashtra Scooters. Most companies’ share prices did not change significantly. Mask Investment, for example, rose 47% on October 28 after previously trading at a 79% discount to its book value.
How does the special call auction work?
The unique call auction window will be available once a year only. The exchange must provide at least 14 days’ notice about equities that will be available for the special call auction. The special call auction will be considered successful if at least five unique buyers and sellers participate in it. If price discovery is not successful on the first day, the auction will continue on subsequent days until price discovery is achieved.
Elcid Investments, the most expensive stock on Dalal Street, has increased in price and now exceeds ₹3 lakh.
On Thursday, November 7, Elcid Investments’ shares reached ₹3,16,597 a share, crossing the 5% upper circuit limit. The stock, which made news for its remarkable jump on October 29, has remained above the upper circuit limit since then.
Today is the sixth consecutive session that the stock has been stuck in the 5% upper circuit. On October 29, the stock had an astounding jump of 66,85,452% after being relisted on the exchanges. The relisting was part of a BSE initiative to improve price discovery for chosen investment holding entities through a unique call auction procedure.
The special call auction resulted in an amazing price of ₹2,36,250 per share, making the stock the most expensive on Dalal Street in a single session, breaking the long-standing record set by MRF.https://futurestockvalue.com/most-expensive-stock-in-india/
Elcid Investments is a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI) under the category of investment firm. Holding companies typically own a variety of investments, including shares in other publicly traded companies, but do not engage in day-to-day company activities. Because of low trading volumes and limited liquidity, these companies sometimes trade at a substantial discount to their book value.
Before the special call auction, Elcid Investments had a book value of approximately ₹4 lakh. Despite the recent price discovery, the stock remains below the book value.
Investor interest in holding companies increased when SEBI proposed in July to use special call auctions without price bands to close the gap between the current market price and the book value of these entities.
Elcid’s FY24 annual report shows that its investments, including loan and equity, total around ₹12,450 crore.
Elcid’s 2.83% ownership in Asian Paints, valued at almost ₹8,500 crore based on recent market prices, contributes considerably to its entire market capitalization. This investment is an important asset for Elcid, increasing its entire value. The company also owns holdings in various unlisted companies.
Investors should be aware that the stock price surge is just the result of a mismatch between demand and supply. Only 1,300 shares were traded today on both the NSE and the BSE, indicating a low level of trading activity. This shows that price movements may be influenced by a lack of liquidity and trading volume rather than fundamental considerations.
Elcid Investments hits ₹3 lakh apiece, enough to buy one stock from each of the Nifty100 cos
Elcid Investments’ shares skyrocketed on October 28 following a special price discovery exercise performed by the stock markets. It was initiated after the Securities and Exchange Board of India (SEBI) announced a new mechanism in June to improve price discovery for Investment Companies (ICs) and Investment Holding Companies (IHCs). The goal was to get a company’s actual price closer to its book value.
Elcid Investments shares crossed the ₹3 lakh barrier on Wednesday, continuing their upward trend since October 28. However, the stock price remains below its book value per share, which was ₹4,06,242 as of March 2024.
Surprisingly, with a single share of Elcid Investments, one can now purchase at least one stock from the entire Nifty100 index. Bosch and Shree Cement have higher stock prices, ranging from ₹25,000 to ₹36,000. NHPC is the lowest listed index member, with a share price of ₹84. Purchasing 100 stocks yields about ₹17,000!
Elcid Investments’ shares skyrocketed on October 28 following a special price discovery exercise performed by the stock markets. It was initiated after the Securities and Exchange Board of India (SEBI) announced a new mechanism in June to improve price discovery for Investment Companies (ICs) and Investment Holding Companies (IHCs). The goal was to get a company’s actual price closer to its book value.
Book value per share (BVPS) is simply a company’s total assets less its total liabilities. The financial metric helps determine whether the stock price is undervalued in relation to its total assets. It is computed by dividing a company’s total equity by its outstanding shares.
Elcid Investments, one of Asian Paints’ promoters, owns a 2.95% stake in the company, valued at ₹8,200 crore as of Wednesday’s closure. Elcid Investments now has a worth of ₹6,030 crore.
Elcid Investments’ thinly traded shares increased dramatically on October 28 and has continued to rise since then. The stock has increased from ₹3.53 to ₹1,61,023 on day one and is now at ₹3,01,521.40. On the BSE, 1,032 shares traded on Wednesday, bringing the total volume for the last two weeks to 4,283. This compares to the 90-day average volume of just 19.
Aside from the Managing Director, the company only had three permanent staff. Elcid Investments boosted their net profit by 139% to ₹176 crore in FY24.
During the year, the company’s sales more than doubled to ₹236 crore. As of September 2024, the company’s total outstanding shares were merely 2 lakhs, with the promoters holding 75%.
Elcid Investments settles disclosure lapses complaint with SEBI and Pays Rs 17.3 lakh.
Elcid Investments Ltd has settled a lawsuit with market regulator Sebi over failure to maintain an organized digital database and disclosure failures by paying Rs 17.31 lakh as a settlement sum.
This arose after Elcid Investments submitted an application with the Securities and Exchange Board of India (Sebi) requesting that the adjudication procedures for the alleged violations be settled by settlement order.
“The instant adjudication proceedings initiated against the applicant vide show cause notice… dated October 31, 2023 is disposed of,” Sebi stated in its settlement order.
In its show cause notice, the regulator said that Elcid Investments failed to keep a structured digital database during the inquiry period. Also, it neglected to report Jatin Saraiya’s (a member of Elcid Investments’ promoter group) combined shareholding of 50 shares with his spouse for the quarters ending December 2021 and June 2022.
This resulted in suspected violations of insider trading rules and LODR (Listing Obligations and Disclosure Requirements) standards, it claimed.
The warning was issued after Sebi undertook an inquiry to verify Elcid Investments Ltd’s compliance with securities legislation regulations following complaints received through SCORES. The investigation ran from March 9, 2022 to May 13, 2022.
Is Elcid Investments a Good Investment?
Investing in Elcid Investments is not for everybody. Here are a few important concerns.
- High Entry Barrier: Retail investors struggle to participate due to the high price per share.
- Liquidity Risk: Because it is infrequently traded, locating buyers or sellers when necessary can be difficult.
- Concentration Risk: The valuation of the company is largely contingent upon its investments in Asian Paints. Any adverse developments concerning Asian Paints could substantially influence Elcid’s overall worth.
For investors with the financial capacity to manage the significant cost and a commitment to long-term holding, Elcid Investments provides access to a strong portfolio of blue-chip stocks. Nevertheless, it is crucial to conduct thorough due diligence prior to engaging in such a substantial investment.
Conclusion
Elcid Investments Ltd. emerging as the most costly stock in India underscores the distinctive characteristics of the Indian equity market, where the price does not necessarily correlate with liquidity or trading volume. Although it may not possess the same level of recognition as MRF, its extraordinarily high share price and prestigious investment portfolio render it an intriguing narrative within the realm of Indian stocks.
Investors seeking ultra-premium stocks may find Elcid Investments to be of interest; however, the associated high risks and low liquidity suggest that it is more appropriate for experienced investors who possess a strong tolerance for risk. Currently, Elcid Investments continues to represent a hallmark of exclusivity within the Indian stock market.
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