Available at just Rs 16; this illiquid stock is worth over Rs 1.70 lakh
During the past 10 years, shares of the company traded for just 40 sessions as there are no sellers for this counter in the market
This microcap stock on Dalal Street is available at Rs 16.20. However, a calculation shared by market watchers showed that the stock’s fair value stands at over Rs 1.70 lakh, which is more than 10,000 times higher than the prevailing market price. This is one of the rare stocks on Dalal Street which usually stays on upper circuit.
Here we are talking about an illiquid stock Elcid Investments. During the past 10 years, shares of the company traded for just 40 sessions as there are no sellers for this counter in the market. With a market capitalisation of Rs 0.32 crore, shares of the company last traded on July 27, 2021.
Fair value
Which sharing his calculations with Money9.com, Delhi-based investor Ashish Chugh said that Elcid Investments holds a 2.95% stake, or 2,83,13,860 shares in Asian Paints whose market capitalisation stands at Rs 2,90,000 crore. At the current market price of nearly Rs 3,000, the investment of Elcid Investments stands at around Rs 8,500 crore in the paint major. It is one of the promoters in Asian Paints.
Considering the equity base of 2 lakh shares of Elcid, Chugh sees the company’s per share value at Rs 4.25 lakh. However, he added that a holding company usually trades at a discount. So, considering a 60% discount on the per share value, Chugh estimated that the market value of Elcid Investment should be minimum Rs 1.70 lakh.
Kolkata-based investor Arun Mukherjee also said that the fair value of Elcid Investments could be around Rs 3-4 lakh.
Shareholding pattern
Promoters of the company including Amar Arvind Vakil, Dipika Amar Vakil, Varun Amar Vakil and Amrita Amar Vakil held a 74.98% stake in the company as of June 30.
Earlier in 2013, promoters announced a delisting offer for Rs 11,455 per share but it was rejected by shareholders as the real value was 10 times the delisting price.
Price discovery
Mukherjee said that for this kind of case and to realise the proper share value regulator should allow exchanges to keep a trading day or even a week without applying any circuit filter in the stock.
On the other hand, Chugh added that there is a need for exchanges to take necessary steps to allow proper price discovery in the stock. Otherwise, it will be stuck at the current market levels till eternity.