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Elcid Investments on October 29 overtook MRF to become India’s most expensive stock
Elcid Investments
If you believe MRF Ltd is the highest-priced shares in the Indian stock market, then one must be proved wrong. The Rs 1.2 lakh tyre maker’s stock is dwarfed by a microcap player with nearly double its price as of Tuesday. Interestingly, this stock was just a penny stock worth Rs 3.21 in July this year.
Elcid Investments on October 29 overtook MRF to become India’s most expensive stock. Thanks to BSE auction for price discovery of holding companies, each share of Elcid was valued at Rs 2.25 lakh.
The smallcap stock created history on Dalal Street as its share price soared from Rs 3.53 to an astounding Rs 2,36,250 in one day, a jump of a mind-boggling 66,92,535%. Meanwhile, on October 29, MRF shares on BSE closed 0.61% lower at Rs 1.22 lakh apiece.
The highest traded value of Elcid was Rs 4.58 lakh, but price discovered was at Rs 2.25 lakh.
BSE had conducted auction on October 28 for price discovery of holding companies.
Rs 1 lakh investment in this stock would have generated returns to the tune of a whopping Rs 670 crore in the span of a few months.
A BSE circular, dated October 21, mentioned that relisting of select investment holding companies (IHCs) through a special call auction mechanism for a price discovery on Monday. The effective rates were settled on Tuesday, October 29 after the special provision.
Elcid Investments was among one of them. Other companies included names like Nalwa Sons Investments, TVS Holdings, Kalyani Investment Company, SIL Investments, Maharashtra Scooters, GFL, Haryana Capfin and Pilani Investment and Industries Corporation.
The promoters of Elcid Investments voluntarily made an offer for its delisting for a base price of Rs 1,61,023 per share. A special resolution was proposed for the same. However, the resolution failed due to non-receipt of requisite majority of public shareholders.
Elcid Investments, with 2,00,000 share capital, holds 2,83,13,860 equity shares or 2.95 per cent stake in Asian Paints Ltd, which is worth nearly Rs 8,500 crore as of its previous close. This is the only reason that makes this stock so richly priced at the stock markets. There is still a catch.
Hitesh Dharawat of Mumbai-based Dharawat Securities said that Elcid Investment has remained a buzz word on Dalal Street due its holding in Asian Paints. The stock has zoomed straight to Rs 2.35 lakh from Rs 3-4 a day ago. However, the book value still remains higher than the current stock price, but it commands the holding company discount.
Despite trading at Rs 2.36 lakh per share, the stock is still trading at nearly 45 per cent discount to its intrinsic share price value of Rs 4.25 lakh per share, based on its holding in the Asian Paints. Before Tuesday’s 190 share trade worth Rs 4.33 crore, the stock has barely seen any exchange of hands in the last few years.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said that such companies have business of holding stocks of other companies which direct the stock prices for investors. Putting money in such companies is purely based on individuals’ risk appetite but one should note that these companies may have liquidity risks.
“Investors should look at cash flows and the nature of the business of a company before investing. If it suits their risk profile, then only it makes sense to put in their money. Such companies may carry some value but investors should know a way to exit such counters to ensure liquidity for them,” he cautioned.
