This dream run has placed Elcid Investments at an astounding ₹2.36 lakh up from ₹3.53 to become the most expensive stock in Indian trading markets. This meteoric rise which happened on 29/10/2023 has brought a dramatic shift on what is possible in stocks for value investors but has also left many in shock as to how fluctuating the stock market is.

The Journey of Elcid Investments

The privately held Elcid Investments operates as an NBFC and is also listed with RBI as an investment company. It has equity investments of about 2.83 per cent in Asian Paints and several other unlisted entities in its portfolio currently worth around ₹ 8,500 crore. By FY24 the total investment of the company through debt as well as through equity mobilization exceeds ₹12,450 crore.

In the past, the stock price of Elcid also ranged from as low as ₹3 to as high as ₹15 and thus many investors looked at it in the middle of the common penny stock. But they have been highlighted mainly for the phenomenal book value in terms of ₹4 lakh per share which shows real value of the share is substantially under-priced. The sharp spike up in the price cannot be attributed to the speculative trading of the shares alone because the stock exchanges came up with a special call auction through which details of the price are discovered.

What Triggered the Surge?

The massive rally of the stock was mainly triggered by a special call auction without price bands for investment holding companies. SEBI recently released a circular aimed at improving the price discovery mechanism through this mechanism. On October 29 this very auction was able to produce an astounding price of ₹2,36250 per share, erasing the previous high set by MRF and create a new record on Dalal Street.

For the small investor it simply means getting himself into a state of nervous gibberish. An investor with 10000 shares would have turned ₹ 33500 to ₹ 250 crores which explains the high volatility of stock markets and how one could make highly favorable gains under right conditions.

The Landscape of Expensive Stocks in India

They have now become one of the most expensive stocks in India and now belongs to the same league comprising MRF Page Industries and Honeywell Automation Ltd. However if Elcid is experiencing a new rise it will cause debate over the definition of the investment holding companies (IHCs) and investment companies (ICs) which use more of the passive investment techniques than active operational participation.

The approach of price discovery that has been adopted for Elcid to value these stocks is another advance in increasing accountability and fairness when fixing the price. Even though such a surge might appear quite unrealistic presently it shows that there can be excellent opportunities to gather a tremendous amount of wealth with proper recognition and consequent management of the quirky risks connected to penny stocks.

Conclusion

The dramatic rise of Elcid Investments from a mere penny stock to achieve the apex of Indian stock market is a contradicting yet appealing experience of an investment. For those still on the prowl for multibagger possibilities the experiences in the Elcid advance are a sobering lesson in the stock market booms and glorious busts. Over the long-term these same market structures will continue to focus on how different price discovery methods are practiced to determine the future of investment prospects of Indian stocks.