If you think MRF Ltd has the highest-priced shares in the Indian stock market, you might be mistaken. The tyre manufacturer, valued at Rs 1.2 lakh per share, has been surpassed by a microcap stock that is nearly double its price as of Tuesday. Interestingly, this stock was just a penny stock trading at Rs 3.21 back in July.
The smallcap stock created history on Dalal Street as its share price soared from Rs 3.53 to an astounding Rs 2,36,250 in one day, a jump of a mind-boggling 66,92,535%. Meanwhile, on October 29, MRF shares on BSE closed 0.61% lower at Rs 1.22 lakh apiece.
Elcid Investments Takes the Lead
On October 29, Elcid Investments surpassed MRF to become India’s most expensive stock. This change resulted from a BSE auction focused on determining the price of holding companies, which valued each share of Elcid at an impressive Rs 2.25 lakh.
Remarkable Surge in Share Price
Elcid Investments made headlines on Dalal Street as its share price skyrocketed from Rs 3.53 to a staggering Rs 2,36,250 in just one day, representing an extraordinary increase of 66,92,535%. In comparison, MRF shares closed at Rs 1.22 lakh on the BSE, marking a decline of 0.61%.
Auction Details and Valuations
The highest traded value of Elcid reached Rs 4.58 lakh, but the auction determined the price at Rs 2.25 lakh. A BSE circular issued on October 21 announced the relisting of select investment holding companies (IHCs) through a special call auction for price discovery on October 28, with finalized rates confirmed the next day.
Other Companies in the Auction
Elcid Investments was one of the companies involved in this process, alongside others like Nalwa Sons Investments, TVS Holdings, Kalyani Investment Company, SIL Investments, Maharashtra Scooters, GFL, Haryana Capfin, and Pilani Investment and Industries Corporation.
Delisting Offer and Shareholding
The promoters of Elcid Investments voluntarily proposed to delist the company at a base price of Rs 1,61,023 per share, but the resolution failed due to insufficient support from public shareholders. Elcid Investments has a share capital of 2,00,000 and holds a 2.95% stake in Asian Paints Ltd, amounting to 2,83,13,860 equity shares, which are valued at approximately Rs 8,500 crore based on the last closing price. This substantial holding is the main reason for the stock’s high valuation, despite some complexities.
Market Buzz and Holding Company Discount
Hitesh Dharawat from Dharawat Securities in Mumbai noted that Elcid Investments has become a buzzword on Dalal Street due to its stake in Asian Paints. The stock price recently jumped from Rs 3-4 to Rs 2.35 lakh. However, while the book value exceeds the current stock price, the company faces a holding company discount.
Valuation and Liquidity Risks
Despite trading at Rs 2.36 lakh per share, Elcid is still priced nearly 45% below its intrinsic value of Rs 4.25 lakh per share, based on its holdings in Asian Paints. Before the recent trade of 190 shares valued at Rs 4.33 crore, the stock had experienced very little activity in recent years.
Investment Considerations
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, explained that companies like Elcid primarily invest in other firms, which influences their stock prices for investors. Investing in such companies depends on individual risk tolerance, and they may carry liquidity risks.
“Investors should examine cash flows and the nature of the business before investing. If it aligns with their risk profile, then investing may be sensible. While these companies might hold some value, investors must have a strategy to exit these positions to ensure liquidity,” he cautioned.
