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The Indian stock market witnessed a remarkable surge in the price of Elcid Investments on October 29, 2024. Its share price soared from Rs 3.53 to an astounding Rs 2,36,250, representing a staggering 66,92,535% increase. This phenomenal rise propelled Elcid Investments to the position of India's most expensive stock, surpassing even MRF Ltd. The significant jump in price was triggered by a price discovery auction conducted by the Bombay Stock Exchange (BSE) for holding companies.
Despite this impressive price jump, the article suggests that Elcid Investments may still be undervalued. The stock's current price of Rs 2,36,250 pales in comparison to its book value, which stands at Rs 5.84 lakh. Book value per share is a fundamental metric that measures a company's net asset value (NAV) per share. It is calculated by dividing the company's total equity by the number of outstanding shares. The significant gap between the stock price and book value indicates a potential upside for investors.
The article sheds light on the reasons behind Elcid Investments' impressive performance. The company operates as a registered Non-Banking Financial Company (NBFC) under the investment company category with the Reserve Bank of India (RBI). While Elcid Investments doesn't have any active operational businesses of its own, it holds substantial investments in other large companies, including Asian Paints. The company's primary source of revenue is the dividends generated from these holding companies. Elcid Investments boasts a portfolio exceeding Rs 11,000 crore in investments, with a market capitalization of Rs 4,725 crore.
The article delves into the regulatory changes that facilitated the recent price discovery for Elcid Investments. In June 2024, the Securities and Exchange Board of India (SEBI) issued a circular outlining a new mechanism to improve the price discovery process for Investment Companies (ICs) and Investment Holding Companies (IHCs). SEBI recognized that many ICs and IHCs were trading at prices significantly below their book values. To address this discrepancy and boost investor interest, SEBI introduced a framework for “special call auction with no price bands” for these stocks. This framework aimed to enhance liquidity, promote fair price discovery, and attract more investor participation in these companies.
In conclusion, the article highlights the remarkable growth and potential of Elcid Investments. The company's stock price surge, coupled with its undervalued position relative to its book value, makes it an attractive investment opportunity for those seeking high-growth potential. The regulatory changes introduced by SEBI to improve price discovery for investment companies have further propelled Elcid Investments towards a brighter future.
Source: Elcid Investments stock, priced at Rs 2.36 lakh, could be worth Rs 5.84 lakh; here's why