Elcid Investments: The Most Expensive Stock!

Elcid Investments, once a penny stock, is now trading at around ₹2,36,250. It was trading at around Rs. 3.5 in June 2024 and now 67,49,900% Gain! So, how did Elcid Investments become the most expensive stock in the market, and what does the company actually do?

Elcid is an Investment Company (IC), specializing in investing in stocks, mutual funds, debentures, and similar assets. Elcid Investments has just 328 shareholders (6 promoters and 322 public) and total number of shares at only 2,00,000. The company holds 2,83,13,860 equity shares or nearly 3% stake in Asian Paints, which is worth nearly Rs 9,000 crores.

Recently, a June 2024 SEBI circular introduced a new mechanism aimed at improving price discovery for such ICs. SEBI observed that many such ICs were trading well below their book value, which led to the introduction of a new framework - “special call auction with NO price bands”. This framework aims to boost liquidity, encourage fair price discovery, and stimulate investor interest in these stocks.

Now to be eligible for a special call auction, a company must:

  1. Be recognized as an Investment Company by the exchange(s)
  2. Be listed on an exchange(s) for at least one year without suspension from trading
  3. Hold at least 50% of its assets in investments in other listed companies
  4. Have a 6-month Volume Weighted Average Price (VWAP) of less than 50% of its book value based on its investment holdings

Elcid Investments met all these criteria. In June 2024, it was trading at just ₹3.5 per share, while its book value was more than ₹4,00,000 per share. Due to this massive gap, eliminating price bands for Elcid Investments made sense, as the stock was repeatedly hitting the upper circuit, delaying the true price discovery. (Personally even I used to place an AMO at UC in the hope of getting shares! :sweat_smile:)

As a result, Elcid Investments participated in the first-ever special call auction held on October 28, and by October 29, it was trading at ₹2,30,000 per share (well below its book value).

How does the special call auction work?

  1. Each scrip is allowed a special call auction window only once a year.
  2. Exchanges must provide at least 14 days’ notice for the eligible stocks.
  3. A successful auction requires the participation of at least five unique buyers and sellers.
  4. If the price discovery isn’t successful on the first day, the auction can continue for consecutive days until a price is reached.
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Then what happened ? Feeling rich @iamshrimohan :sweat_smile:

@iamshrimohan is there any other similar comapny of this sort

Very interesting!

Wow! Even after this much. There is a gap of almost 1.5 lakh in book value vs CMP!!!

One question though, @iamshrimohan, why didn’t promoters take the company private in such scenarios?

@t7support Unfortunately sellers were smarter than me :stuck_out_tongue: and so were their Broker’s RMS policies (post Anugrah and Karvvy case).

@ARVIND1 All the holding companies / investment companies trade at a deep discount from their book valuations, mainly because on books the share value is high but its very difficult to liquidate the company and get its true value out practically. The examples could be Maharashtra Scooters, Grasim, Pilani Investment, Bombay Oxygen (This was quite popular as during Covid when there was lack of supply of Oxygen, people thought this company deals in Oxygen :stuck_out_tongue: ), Tata Investment Corporation. On my radar, the company similar to this is Taparia Tools - I use Dhan AMO feature to put a Pre-Market order in UC to check my luck! :smiley:

@Shally I think there could be some legal aspect to this. IMO, once a company goes public, it would need all the shareholders approval along with some other aspects (maybe some CA out here could put more light onto this) to make it private. The company tried to buyback the shares at various time intervals but the pricing was nearly in '000 so people did not tender their shares (even I wouldn’t in that case :smiley: )

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