How Did a Share Worth 3.53 Rupees See a 6 Million Percent Growth in One Day?

Introduction

Whenever share prices start rising dramatically in a heavy bull market, the wisest investors remind newcomers that “trees don’t grow to the sky.” However, small-cap stock Elcid Investments has gone down in the history of Dalal Street as a rare exception. With a mind-boggling 66,92,535% jump in share prices, it has left both old and young investors dumbfounded.

Unbelievable Surge in Price

The little-known stock, which was traded only once in 2024, saw just 500 shares change hands at 3.53 rupees ($0.042) per share on June 21. On Tuesday, October 29, its share price suddenly jumped to 2.36 lakh rupees ($2,800) with a small trading volume of 241 shares. This remarkable increase marked an unprecedented rise of 66,92,535% in just one day. At a per-share price of 2.36 lakh rupees ($2,800), Elcid is now India’s most highly priced stock, surpassing MRF’s 1.2 lakh rupees ($1,424) price tag. This overnight success has turned even a small investment of 10,000 rupees ($118.64) into a staggering 67 crore rupees ($7,948,666) in just a few months. At 2.36 lakh rupees ($2,800) per share, one share of Elcid is worth more than Nvidia and FAANG stocks combined.

What is Elcid Investment and Who Owns It?

Elcid Assets Ltd. was founded in 1981 as an investment firm that generates revenue from its assets. Murahar Investments Trading Co. Ltd. and Suptaswar Investments Trading Co. Ltd. were the company’s two subsidiaries as of March 31, 2019. Elcid Investments Ltd. takes pride in its many years of experience in the investing industry and its ability to deliver trustworthy services. Its primary objective as a top investment firm is to maximize investor earnings. The business aims to offer the best investment options and believes in delivering client pleasure at every level. Elcid Investments Ltd. helps its customers make the best choices by offering them careful advice and support. The business guarantees that its customers receive the highest returns on their investments possible.

Mumbai-based Elcid is an NBFC (Non-Banking Financial Company) in which the promoters of Asian Paints own a 75% stake. Hydra Trading and 3A Capital Services hold stakes of 99.04% and 3.34%, respectively. Elcid holds a 1.28% stake in Asian Paints, worth around 3,600 crore rupees ($434.78 million), accounting for about 80% of the NBFC’s total market cap of approximately 4,725 crore rupees ($570.48 million). Even at 2.36 lakh rupees ($2,800) per share, Elcid trades at a price-to-book multiple of just 0.38, according to calculations done by Samco Securities. The company reported revenues of 235 crore rupees ($28.31 million) in FY24, mostly from dividends, and profits of 176 crore rupees ($21.18 million).

Share Price: ₹316597.45 ($3,756) per share as on 07 Nov, 2024 10:15 AM
Market Capitalisation: ₹6,030.43 crore ($726.57 million) as of today
Revenue: ₹177.91 crore ($21.42 million) as on June 2024 (Q2 FY24)
Net Profit: ₹135.95 crore ($16.38 million) as on June 2024 (Q2 FY24)
Chairperson Name: Varun A Vakil

Low Trading Volume and Price Discrepancy

So now there’s a question: Why was it trading at 3.5 rupees ($0.042)? And how could a stock jump by 6.7 million percent in a single trading session when there are daily upper circuit limits to control volatility on both sides?

Elcid’s book value was an astounding 5,85,325 rupees ($69,454) per share, even though the company has been trading at under 3 rupees ($0.036) per share since 2011. Existing shareholders were reluctant to sell the stock at low prices because of this large discount, which resulted in very little trading activity. The stock price has been stuck in the low single digits for more than ten years since most stockholders have been reluctant to sell any shares.

Investors should be aware that valuation and share price are two distinct ideas. Just as a low share price does not always indicate that a stock is inexpensive, a high share price does not always indicate that a stock is expensive.

Why Did Elcid’s Share Price Rise Multi-fold in One Day?

After SEBI requested that the stock exchanges organize a special price discovery session to assist in the valuation of holding companies such as Elcid, the situation for Elcid shareholders altered. In order to increase liquidity and promote fair price discovery, the BSE and NSE hosted a special call auction session this week for holding companies without price bands as part of this new mechanism. One such listed investment firm that has been trading sparingly and at prices much below its book value was Elcid. The stock saw a fair value discovery during this week’s special session, which led to a 6.7 million percentage increase—the largest single-day gain in history.

Dividend Rewards for Shareholders

Elcid Investments has been liberal in paying out large dividends to its stockholders, even when its valuation was incorrect in the past. The business announced a dividend of 25 rupees ($0.30) in FY24, which translates to an industry-best dividend yield of more than 78%.

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