Elcid Investments, a Mumbai-based non-banking financial company (NBFC) with deep connections to Asian Paints, recently achieved an extraordinary milestone that has left the financial world in awe. Imagine checking your trading app one morning and discovering that an overlooked stock has become an overnight sensation. This isn’t a scene from a Wall Street thriller but the real story of Elcid Investments, a small-cap stock that rocketed from Rs 3.53 to an eye-popping Rs 2,36,250 per share, capturing the attention of investors across the spectrum. The staggering 66,92,535% rise in stock has dethroned MRF, long regarded as India’s priciest stock, and cemented Elcid’s place in the country’s stock market history.
Up until this surge, Elcid remained largely unnoticed. It had seen only one trade in 2024 until June 21, when 500 shares exchanged hands at Rs 3.53 each. However, this past Tuesday, the stock skyrocketed to Rs 2,36,250 per share, with only 241 shares traded, surprising everyone from new investors to seasoned market analysts. This sudden valuation jump has raised a chorus of questions about Elcid’s unusual trading pattern and the underlying factors that led to such an exceptional increase in its share price.
Elcid’s Ownership Structure and Link to Asian Paints
The Investments operates as a non-banking financial company (NBFC) with strong ties to Asian Paints, one of India’s most prominent paint manufacturers. The promoters of Asian Paints hold a controlling 75% stake in Elcid, while Hydra Trading and 3A Capital Services hold stakes of 9.04% and 3.34%, respectively. This close connection to Asian Paints provides Elcid with a certain level of stability, as its ownership structure is underpinned by substantial stakeholders.
One of Elcid’s key assets is its 1.28% ownership in Asian Paints, which is valued at approximately Rs 3,600 crore. This holding represents close to 80% of Elcid’s total market capitalisation, which currently stands at Rs 4,725 crore. Despite this high valuation, Elcid trades at a notably low price-to-book ratio of just 0.38, according to calculations from SAMCO Securities. In the financial year 2024 (FY24), it reported revenues of Rs 235 crore, largely derived from dividends, with a net profit of Rs 176 crore. This significant connection to Asian Paints and Elcid’s valuable holdings add substantial weight to its valuation, making its stock price rise even more interesting to investors.
For years, Elcid had traded at just a few rupees per share, a seemingly baffling price given its valuable holdings in Asian Paints. Although its book value per share stands at a striking Rs 5,85,225, Elcid’s stock price lingered around Rs 3.5 per share since 2011. This vast difference between its book value and trading price led to limited trading volume, as shareholders hesitated to sell shares at a price well below their perceived worth. This minimal market activity kept the stock’s price suppressed for over a decade, with few investors willing to trade it at such low levels.
What Triggered Elcid’s Massive Price Surge?
The phenomenal rise share price can be attributed to regulatory intervention by the Securities and Exchange Board of India (SEBI), India’s market regulator. To address the issue of undervalued stocks like Elcid that were trading far below their actual worth, SEBI instructed stock exchanges to conduct a special price discovery session. The purpose was to reassess and accurately value holding companies such as Elcid, where market prices were significantly out of sync with book values.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) responded by organising a special call auction session for these holding companies, allowing trades without the usual price bands. This move aimed to increase liquidity and enable a fairer price discovery process for stocks that had been overlooked by investors. For a company, which saw limited trading and minimal price movement for years, this session provided a unique opportunity to recalibrate its market value.
As a rarely traded investment company, Elcid reaped substantial benefits from this special price discovery session, which brought to light its true market value. The resulting adjustment led to an eye-watering 6.7 million percent increase in its share price, marking the highest single-day gain in stock market history. This unprecedented spike has stirred significant interest among investors and analysts alike, many of whom are now paying closer attention to previously neglected stocks.
Why Was Share Trading at Rs 3.5 Per Share for So Long?
The anomaly share price can be explained by the significant gap between its actual book value and trading price, which deterred many shareholders from selling at the low market rates. Despite being undervalued on the stock market, Elcid’s book value per share stood at a staggering Rs 5,85,225, vastly higher than the Rs 3.5 per share it was trading for since 2011. This unusual discrepancy created a situation where shareholders saw little incentive to trade their shares at the low market price, resulting in limited trading volume. As a result, Elcid’s price remained suppressed for over a decade, with few shares changing hands.
However, SEBI’s recent price discovery session provided a platform for stocks like Elcid to achieve a fairer valuation. With the lifting of typical price bands during this special session, the true value could finally emerge, triggering a surge in its share price. The session facilitated a level of liquidity previously unseen for Elcid, and this increased trading activity pushed the stock price to new heights. For investors and market observers, Elcid’s meteoric rise highlights the impact that regulatory interventions can have on undervalued stocks, especially those with significant underlying assets.
This spectacular rise of Elcid from an overlooked stock trading at mere rupees per share to India’s most expensive stock is a testament to the potential hidden value in certain small-cap investments. The story may prompt other investors to re-evaluate similar underappreciated stocks in the market. As continues to draw attention for its newfound status, it remains to be seen whether this will lead to more special price discovery sessions for other holding companies, possibly revealing more hidden gems in the Indian stock market.
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