73,600x surge in 2 days: Elcid Investments now India's 'priciest' stock

Shares of Elcid were frozen at Rs 3.21 apiece for the past year, with barely any buyers or sellers in the counter

A little-known smallcap company, Elcid Investments, took a giant leap into the history books on Tuesday when its shares surged a staggering 6.7 million per cent to become the priciest stock in absolute terms, surpassing tyre major MRF.

 

Shares of Elcid Investments, a non-banking financial company (NBFC), closed at Rs 2,36,250 apiece on Tuesday, valuing the company at Rs 4,725 crore. The share price of MRF, on the other hand, stood at Rs 1,22,577, even though the company’s market capitalisation was much higher at Rs 51,890 crore.

 

Shares of Elcid were frozen at Rs 3.21 apiece for the past one year with barely any buyers or sellers on the counter. But the share price soared about 73,600 times following a special call auction session, started by the stock exchanges from this week in a bid to arrive at a fair price discovery of investment holding companies (holdcos).

 

Despite a very low share price for a long time, Elcid’s book value per share stood at Rs 5,85,225. This massive discount left existing shareholders unwilling to sell, with no trades occurring since 2011, SAMCO Securities said.

 

“To address this undervaluation, the exchanges organised a special auction session for holding companies with deep discounts compared to their book value. This session led to a fair value discovery of its price,” said Raj Gaikar, research analyst, SAMCO Securities, according to media reports.

 

Elcid Investments is categorised as one of the many “promoter” entities in Asian Paints. It has a 2.95 per cent stake in the country’s largest paint company, which is valued at almost Rs 8,500 crore. Elcid has an equity base of only 200,000 shares, of which 150,000 shares are held by promoters.

 

The Securities and Exchange Board of India had in June issued a new framework for select investment holdcos to be eligible for the special call auction. The auction did not have any price bands, according to the Sebi directive, to enable price discovery.

 

Holdcos do not have operations of their own but hold stakes in other assets including shares of other listed companies. These firms mostly hold investments in their own group companies.

According to information given on its website, Elcid Investments is an RBI-registered NBFC and its business is to make investments in shares, debentures, mutual funds, etc. The company has two subsidiaries -- Murahar Investments & Trading Company Limited and Suptaswar Investments & Trading Company Limited. Both these subsidiaries are also registered with the RBI as NBFC.

 

Changing fortunes

 

Shares of Elcid Investments closed at Rs 2,36,250 apiece on Tuesday, as against MRF’s Rs 1,22,577

The sharp surge came after a special call auction ‘with no price bands’ was held for the stock

In June, Sebi had issued a framework for select holdcos to be eligible for such an auction for price discovery

Elcid holds 2.95% in Asian Paints, with stake valued at about Rs 8,500 crore