From penny stock to India’s most expensive share: Elcid Investments' historic leap from Rs 3.53 to Rs 2.36 lakh

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Elcid Investments Ltd, a company once trading at a humble Rs 3.53, achieved an extraordinary milestone on October 29 by becoming India's most expensive stock, with a record-breaking valuation of Rs 2,36,250 per share. This astonishing leap transformed Elcid from a little-known penny stock into a powerhouse on Dalal Street, surpassing the previous record-holder, MRF Ltd.

What does Elcid Investments do?

Elcid Investments Ltd operates as a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI). Unlike traditional businesses, Elcid primarily focuses on investment holdings, managing a robust portfolio in both debt and equity worth over Rs 12,450 crore, according to its latest annual report for FY24. Its most valuable asset is a 2.83% shareholding in Asian Paints Ltd - one of India's top blue-chip firms - estimated at roughly Rs 8,500 crore. In addition, Elcid holds stakes in several unlisted entities, strengthening its portfolio and market valuation.

What triggered the price surge?

The recent price surge wasn't tied to earnings or a single announcement but rather resulted from a unique price discovery process implemented by the Bombay Stock Exchange (BSE). On October 29, Elcid Investments participated in a special call auction, which the exchange conducted without typical price bands to help assess the real value of investment holding companies like Elcid. This process, part of a new mechanism introduced by the Securities and Exchange Board of India (SEBI), aimed to bridge the valuation gap between the book and market values of such firms. This initiative aligns with SEBI's goal to enhance transparency and fair valuation for investment companies (ICs) and investment holding companies (IHCs).

As an investment holding company, Elcid doesn't engage in conventional operations but instead generates income primarily from its holdings. These companies tend to invest across a range of financial assets, including stocks, mutual funds, and debentures. The call auction confirmed Elcid's underlying book value, which had remained undervalued despite an impressive Rs 4 lakh per share book value, pushing its trading price to the unprecedented Rs 2,36,250.

Record-breaking returns and investor gains

For retail investors, the news of Elcid's meteoric rise signals the rare potential of penny stocks to become multibaggers. Historically, Elcid's shares have traded between Rs 3 and Rs 15, maintaining a relatively low profile on the exchange. However, with the special call auction and relisting, those who held on to Elcid's stock witnessed gains unlike any other. A modest investment of Rs 10,000 at the 52-week low of Rs 3.37 would have bought 2,967 shares, which are now worth an eye-watering Rs 70.09 crore. For those holding a larger share volume, say 10,000 shares, the total investment of Rs 35,300 would have skyrocketed to Rs 250 crore in a single day.

Why was Elcid relisted?

The call auction relisting was conducted following a circular from the BSE dated October 21, 2024, triggered by the company's promoters attempting to delist Elcid. The delisting process, however, was halted as it failed to secure the required majority from public shareholders. As a result, the call auction went forward, facilitating a fresh price discovery on October 29, with settlement finalised the following day.

India's costliest stock and beyond

Elcid Investments now ranks as the most expensive stock on India's exchanges, joining a select group of only 30 Indian stocks with values above Rs10,000 per share. These elite stocks include names like MRF, Page Industries, Honeywell Automation India, Shree Cement, and 3M India. On a global scale, Berkshire Hathaway, the renowned investment firm run by Warren Buffett, holds the top position as the costliest stock worldwide, with shares trading around $682,920, or about Rs 5.6 crore.

Elcid Investments' historic rise underscores the potential of undervalued penny stocks, although investors are reminded of the risks inherent in such investments. With its assets now aligned more closely with market value, Elcid stands as a prime example of the unique opportunities that can emerge from regulatory changes aimed at fostering transparency and fairness in India's stock markets.

Elcid's unexpected leap to the top of India's stock listings has captivated retail investors, offering a glimpse into the transformative power of stock market mechanisms and the latent potential of investment holding companies.