Shares of Elcid Investments were locked in the 5% upper circuit limit, crossing ₹3 lakh level to reach ₹3,16,597 apiece on Thursday, November 7. The stock, which made headlines for its extraordinary surge on October 29, has continued to hit the upper circuit limit since then.
Today marks the sixth consecutive session when the stock has been locked in the 5% upper circuit. On October 29, the stock saw an unprecedented surge of 66,85,452% after it was relisted on the exchanges. The relisting was part of a BSE initiative designed to facilitate price discovery for select investment holding companies using a special call auction mechanism.
The special call auction led to an astonishing price level of ₹2,36,250 per share, making the stock the most expensive on Dalal Street in a single session, beating the long-standing record set by MRF.
Elcid Investments operates as a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI) in the category of investment company. Holding companies generally hold a range of investments, including shares in other listed firms, but they don’t engage in daily business operations. As a result, these companies often trade at a significant discount to their book value due to low trading volumes and limited liquidity.
Before the special call auction, Elcid Investments had a book value of around ₹4 lakh. Even after the recent price discovery, its stock remains below this book value.
Investor interest in holding companies surged after SEBI proposed in July to use special call auctions without price bands, aiming to narrow the gap between the current market price and the book value of these companies.
According to its recent FY24 annual report, Elcid's investments, including both debt and equity, are worth over ₹12,450 crore.
Elcid holds a 2.83% stake in Asian Paints, valued at approximately ₹8,500 crore based on recent market prices, which significantly supports its overall market valuation. This investment is a crucial asset for Elcid, enhancing its overall worth. The company also has stakes in several unlisted firms.
Investors should note that the rally in the stock price is merely a result of a mismatch in demand and supply. In today’s session, only 1,300 shares were exchanged across both the NSE and BSE, highlighting the limited trading activity. This suggests that the price movement may not be driven by fundamental factors, but rather by a lack of liquidity and trading volume.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
