Penny stock magic: How did Elcid go from ₹3 to ₹2.36 lakh in a day?

For retail investors chasing multibagger dreams, returns in the hundreds—or even thousands—can often seem too good to be true.

Yet, penny stock Elcid Investments has done the unthinkable, achieving an extraordinary return in a single trading session and positioning itself as the most expensive stock in the Indian market, surpassing the long-standing record set by MRF.

This dramatic rise has left many retail inves torsclosely watching Elcid Investments, as the company’s share price surged from a modest ₹3.53 to ₹2.36 lakh in a single day on 29 October, making history on Dalal Street.

In monetary terms, if an investor had held 10,000 shares in the company, their investment would have soared to an astounding ₹250 crore from an initial outlay of merely ₹35,300.

What triggered the stock's meteoric rise?

The recent surge in its price isn’t simply a reaction to earnings announcements or other singular events.

Rather, it resulted from a special call auction conducted without price bands, specifically designed for price discovery among investment holding companies as organised by the stock exchanges.

Historically, the stock has traded within a narrow range of ₹3 to ₹15. However, it boasts a remarkable book value of ₹4 lakh per share, indicating it has been significantly undervalued in the market.

To close the gap between current market values and the book value of holding companies, exchanges implemented a price discovery process for selected investment holding companies through a special call auction mechanism on 29 October.

The special call auction resulted in an astonishing price level of ₹2,36,250 per share, making the stock the most expensive on Dalal Street. This significant rise underscores the effectiveness of the new mechanism proposed in a recent SEBI circular, which aimed to enhance price discovery for investment companies (ICs) and investment holding companies (IHCs).

Investment companies typically invest in a diverse array of financial instruments, including stocks, mutual funds, and debentures, while IHCs primarily retain ownership of their assets within group companies.

Both ICs and IHCs do not engage in active operations beyond their investment activities, which form their main sources of income and assets.

Elcid holds a 2.83% stake in Asian Paints, valued at approximately ₹8,500 crore based on recent market prices, which significantly contributes to its market valuation. This investment is a crucial asset for Elcid, enhancing its overall worth. The company also has stakes in several unlisted firms.

What does Elcid Investments do?

According to its recent FY24 annual report, Elcid’s investments, including both debt and equity, are worth over ₹12,450 crore. The company operates as a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI) in the investment company category.

Costliest stocks in India

In India, only 30 stocks have a price exceeding ₹10,000, excluding Elcid Investments. Some high-value stocks include MRF, Page Industries, Honeywell Automation India, Shree Cement, 3M India, Abbott India, Nestle India, Bosch, Procter & Gamble Hygiene, and Lakshmi Machine Works.

On a global scale, the title of the world’s costliest stock currently belongs to Berkshire Hathaway, the investment company led by Warren Buffett. Its share price is an astounding $682,920, translating to approximately ₹5.6 crore per share.

Disclaimer: The views and recommendations given in this article are those of individual analysts. They do not represent the views of Mint or Dhanam Business Media. We advise investors to consult certified experts before making any investment decisions.

(By arrangement with livemint.com)