If you believe MRF Ltd is the highest priced shares in the Indian stock market, then one must be proved wrong. The Rs 1.2 lakh tyre maker’s stock is dwarfed by a microcap player with nearly double its price as of Tuesday. Interestingly, this stock was just a penny stock worth Rs 3.21 in July this year.
We are talking about Elcid Investment Ltd, which was relisted at BSE on Tuesday, October 29, with its fair value hitting Rs 2,25,000-market but the stock soared another 5 per cent to Rs 2,36,250 mark for the day, commanding a total market capitalization of nearly Rs 4,800 crore.
A BSE circular, dated October 21, mentioned that relisting of select investment holding companies (IHCs) through a special call auction mechanism for a price discovery on Monday. The effective rates were settled on Tuesday, October 29 after the special provision.
Elcid Investments was among one of them. Other companies included names like Nalwa Sons Investments, TVS Holdings, Kalyani Investment Company, SIL Investments, Maharashtra Scooters, GFL, Haryana Capfin and Pilani Investment and Industries Corporation.
The promoters of Elcid Investments voluntarily made an offer for its delisting for a base price of Rs 1,61,023 per share. A special resolution was proposed for the same. However, the resolution failed due to non-receipt of requisite majority of public shareholders.
Elcid Investments, with 2,00,000 share capital, holds 2,83,13,860 equity shares or 2.95 per cent stake in Asian Paints Ltd, which is worth nearly Rs 8,500 crore as of its previous close. This is the only reason that makes this stock so richly priced at the stock markets. There is still a catch.
Hitesh Dharawat of Mumbai-based Dharawat Securities said that Elcid Investment has remained a buzz word on Dalal Street due its holding in Asian PaintsVaranasi Investment. The stock has zoomed straight to Rs 2.35 lakh from Rs 3-4 a day ago. However, the book value still remains higher than the current stock price, but it commands the holding company discount.
Despite trading at Rs 2.36 lakh per share, the stock is still trading at nearly 45 per cent discount to its intrinsic share price value of Rs 4.25 lakh per share, based on its holding in the Asian PaintsMumbai Wealth Management. Before Tuesday’s 190 share trade worth Rs 4.33 crore, the stock has barely seen any exchange of hands in the last few years.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said that such companies have business of holding stocks of other companies which direct the stock prices for investors. Putting money in such companies is purely based on individuals’ risk appetite but one should note that these companies may have liquidity risks.Hyderabad Stocks
“Investors should look at cash flows and the nature of the business of a company before investing. If it suits their risk profile, then only it makes sense to put in their money. Such companies may carry some value but investors should know a way to exit such counters to ensure liquidity for them,” he cautioned.
Udabur Investment